The Latest Rules on Charitable Donations
Charitable contributions are deductible, says the IRS, only if you itemize deductions. And further, they are deductible only if you make contributions to qualified charitable organizations. The tax agency reminds us that contributions to individuals are never deductible.
But how do you know that the charity you are donating to is qualified? The IRS notes that you can determine whether the organization qualifies as a charity for income tax deduction purposes if you refer to the agency's Tax Exempt Organization Search tool.
What if you receive a benefit from the contribution — such as a public TV station offering a DVD of the program you were just watching — or other goods or services? What about obtaining admission to a charity ball or banquet, or receiving tickets to a theatrical performance or sporting event for your donation? The IRS says you only can deduct the amount that exceeds the fair market value of the benefit received.
And then there's the sticky problem of contributing cash, checks or any other monetary gift —how should you handle this? The tax agency recommends that you maintain a record of the contribution.
For a deduction of a noncash contribution that's more than $500, fill out Form 8283, Noncash Charitable Contributions, and attach it to your tax return. And you'll need a qualified appraisal of the noncash property and must fill out Form 8283, Section B, to claim the deduction for the noncash contribution of property worth more than $5,000.
You also should know that special rules apply for donations of certain types of property that have appreciated in value, including the following:
For more information, you can refer to Publication 526, Charitable Contributions. If you need to determine the value of your noncash contributions, you can take a peek at Publication 561, Determining the Value of Donated Property. We're here if you have any questions.
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