Charitable contributions made to qualified organizations may help
lower your tax bill. The IRS has put together the following eight tips
to help ensure your contributions pay off on your tax return.
1. If your goal is a legitimate tax deduction, then you must be giving
to a qualified organization. Also, you cannot deduct contributions made
to specific individuals, political organizations and candidates. See IRS
Publication 526, Charitable Contributions, for rules on what
constitutes a qualified organization.
2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
3. If you receive a benefit because of your contribution such as
merchandise, tickets to a ball game or other goods and services, then
you can deduct only the amount that exceeds the fair market value of the
4. Donations of stock or other non-cash
property are usually valued at the fair market value of the property.
Clothing and household items must generally be in good used condition or
better to be deductible. Special rules apply to vehicle donations.
5. Fair market value is generally the price at which property would
change hands between a willing buyer and a willing seller, neither
having to buy or sell, and both having reasonable knowledge of all the
6. Regardless of the amount, to deduct a
contribution of cash, check, or other monetary gift, you must maintain a
bank record, payroll deduction records or a written communication from
the organization containing the name of the organization, the date of
the contribution and amount of the contribution. For text message
donations, a telephone bill will meet the record-keeping requirement if
it shows the name of the receiving organization, the date of the
contribution, and the amount given.
7. To claim a deduction
for contributions of cash or property equaling $250 or more you must
have a bank record, payroll deduction records or a written
acknowledgment from the qualified organization showing the amount of the
cash and a description of any property contributed, and whether the
organization provided any goods or services in exchange for the gift.
One document may satisfy both the written communication requirement for
monetary gifts and the written acknowledgement requirement for all
contributions of $250 or more. If your total deduction for all noncash
contributions for the year is over $500, you must complete and attach
IRS Form 8283, Noncash Charitable Contributions, to your return.
8. Taxpayers donating an item or a group of similar items valued at
more than $5,000 must also complete Section B of Form 8283, which
generally requires an appraisal by a qualified appraiser.
Hoffman counsels Entrepreneurs, Professionals and Select Individuals in
taking control of their taxes, and businesses. Discover how I can help
you overcome your tax and business challenges. To start the conversation
or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday -
Friday between 8:30 a.m. to 1:00 p.m. for a no cost consultation, or
drop me a note.
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