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Tips On Deducting Charitable Donations

by Bantonelli on December 17, 2011

  1. The organization must qualify: Charitable contributions must be made to “qualified organizations” as provided by  IRS Publication 526.  Remember, you can’t deduct donations to specific individuals or political organizations.
  2. You must itemize: Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
  3. What you can deduct: You can  deduct cash contributions and the fair market value of most property you donate.  Clothing and household items must be in “good used condition or better” to be deductible.
  4. Receive something in return?: If your contribution entitles you to receive merchandise, goods, or services, you can deduct the amount that exceeds the fair market value of the benefit received.
  5. Pledges and payments: Only contributions actually  made during the tax year are deductible.  For example, if you pledged $500 in May but  paid the charity only $200 by year end, you can only  deduct $200.
  6. Recordkeeping: You must keep records of the contribution.  Save a cancelled check, bank or credit card statement, or a dated/written  receipt from the charity with the amount of the contribution.  For text message donations, keep your phone bill showing the receiving organization, the date, and the amount.
  7. Donations made near year end: Include credit card charges and payments by check in the year you donate to the charity, even if you don’t pay the credit card bill or draft from your bank account  until the next year.
  8. Large donations: For contributions of $250 or more, you need more than a bank record.  You need a dated/written receipt from the charity.  Stating the dollar amount donated and whether the organization provided goods or services in exchange for the gift.  If you donated large items, the receipt must include a description of the items and a good faith estimate of  value.  For items valued at $500 or more you must complete a Form 8283,  Noncash Charitable Contributions, and attach the form to your return.  To claim deductions for a contributions of noncash property worth more than $5,000.  You must obtain an appraisal and complete Section B of Form 8283 with your return.

{ 1 comment… read it below or add one }

Carol Briney December 30, 2011 at 12:47 pm

Jim,

As always, EXCELLENT information. I appreciate these emails and all of your attention to the details of my taxes! You and your company make my life easy.

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