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 noncash 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. 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.
