Tips on Deducting Charitable Contributions

Posted on Wed, Apr 10, 2013 ©2021 Drucker & Scaccetti


Charitable giving is a large part of the American citizens' will to support those who are less fortunate.  We get a sense of satisfaction when we are able to help our fellow man (or woman). And, though giving to charity may fulfill us and make us feel good it can also help lower our tax bill. In a recent release, the IRS offered tips to help ensure your charitable contributions make your wallet feel as good about giving as you do.


1. If you want a tax deduction, you must donate to a qualified charitable organization (A nonprofit organization that qualifies for tax-exempt status according to the U.S. Treasury). You cannot deduct contributions you make to 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, Noncash 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. 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.


6. 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.


7. 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.


8. 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.


Oftentimes, knowing and comprehending all the tax deductions you can take can be difficult. How you take them and what is needed to support and prove the deduction is critical as well.  At Drucker & Scaccetti, our Tax Warriors make the process easier by giving you experienced advice about charitable deductions and other strategies to lower your tax bill. We specialize in helping you plan your giving to take full advantage of your allowable deductions.


If you have questions about your charitable giving plans, please click “Ask A Tax Warrior” below and one of our qualified professionals will contact you.

Topics: Contributions, Charity, charitable deductions, Tips, maximizing, Tax

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