You can deduct donations if you file an itemized return. It doesnt have to be cash. Its a great time to clear out closets and cabinets to get rid of stuff in good condition that you dont use anymore and get a deduction, says Jennifer Rempe, lead tax research analyst with the Tax Institute at H&R Block. This is an especially good year for high-income households to make charitable donations, Labant says. Previously, charitable deductions were reduced as income went up, she says, but this year there is no phase-out for high earners. But, tax experts warn, the IRS is watching to make sure donors have the proper documentation. For small donations cash and property you will need a bank statement or a written receipt that shows the name of the charity, date of the gift and amount. Donations of $250 and up require a letter from the charity acknowledging the gift. And for property donations of more than $5,000, you generally need an appraisal.
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