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Eight Tips for Deducting Charitable Contributions
Charitable contributions made to qualified
organizations may help lower your tax bill. While some of the laws
surrounding charitable contributions can be complex I put together
the following eight basic 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. The IRS publishes rules on
what constitutes a qualified organization so if you are wondering
about a given organization give me a call.
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 benefit received.
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 relevant facts.
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.
For more information on charitable
contributions or to arrange a tax strategy-giving plan contact my
office for an appointment.
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