When preparing to file your federal tax return, don't forget your contributions to charitable organizations. Your donations could add up...
When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. Your donations could add up to a sizable tax deduction if you itemize on IRS Form 1040, Schedule A.
Starting in 2007, to deduct any charitable donation of money, taxpayers must have a bank record or a written communication from the recipient showing the name of the organization and the date and amount of the contribution.
Though taxpayers are already required to keep records to support their contribution deductions, this new provision is designed to provide greater certainty, both to taxpayers and the government, in determining what may be deducted as a charitable contribution.
Here are a few tips to ensure your contributions pay off on your tax return:
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• You cannot deduct contributions made to specific individuals, political organizations and candidates. Nor can you deduct the value of your time or services and the cost of raffles, bingo or other games of chance.
• Contributions must be made to qualified organizations to be deductible.
• Only contributions actually made during the tax year are deductible.
• If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
• Donations of stock or other property are usually valued at the fair market value of the property.
• Clothing and household items donated must be in good used condition or better to be deductible.
• Special rules apply to donation of vehicles.
• You can claim a deduction for individual contributions of $250 or more only if you obtain a written acknowledgment from the qualified organization.
• If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
• 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 requires an appraisal by a qualified appraiser.
For more information, check out Publication 526, Charitable Contributions, which is available at www.irs.gov or by calling 800-829-3676.
— The Internal Revenue Service