Nine Tips
on Deducting Charitable Contributions
Giving to charity may make you feel good and help you lower your tax bill. The IRS offers these nine tips to help ensure your contributions pay off on your tax return.
1. If you want a tax deduction, you must donate to
a qualified charitable organization. You cannot deduct contributions you make to
either an individual, a political organization or a political candidate
2. You must file Form 1040 and itemize your
deductions on Schedule A. If your total deduction for all non-cash contributions
for the year is more than $500, you must also file Form 8283, Non-cash Charitable
Contributions, with your tax return.
3. If you receive a benefit of some kind in return
for your contribution, you can only deduct the amount that exceeds the fair
market value of the benefit you received. Examples of benefits you may receive
in return for your contribution include merchandise, tickets to an event or
other goods and services.
4. Donations of stock or other non-cash property
are usually valued at fair market value. Used clothing and household items
generally must be in good condition to be deductible. Special rules apply to
vehicle donations.
5. Fair market value is generally the price at
which someone can sell the property.
6. You must have a written record about your
donation in order to deduct any cash gift, regardless of the amount. Cash
contributions include those made by check or other monetary methods. That
written record can be a written statement from the organization, a bank record
or a payroll deduction record that substantiates your donation. That
documentation should include the name of the organization, the date and amount
of the contribution. A telephone bill meets this requirement for text donations
if it shows this same information.
7. To claim a deduction for gifts of cash or
property worth $250 or more, you must have a written statement from the
qualified organization. The statement must show the amount of the cash or a
description of any property given. It must also state whether the organization
provided any goods or services in exchange for the gift.
8. You may use the same document to meet the
requirement for a written statement for cash gifts and the requirement for a
written acknowledgement for contributions of $250 or more.
9. If you donate one item or a group of similar
items that are valued at more than $5,000, you must also complete Section B of
Form 8283. This section generally requires an appraisal by a qualified
appraiser.
Additional IRS Resources:
- Publication 526, Charitable Contributions
- Publication 561, Determining the Value of Donated Property
- Schedule A, Itemized Deductions
- Form 8283, Noncash Charitable Contributions
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