The IRS recently issued one of their “Summertime Tax Tip” bulletins to help taxpayers who make charitable contributions so they can be sure of the rules on contribution deductions as follows: Make sure the organization you give to is a qualified charitable organization. Ask the charity about its tax exempt status, or look for it at www.IRS.gov in the Exempt Organizations Select Check, an online search tool that allows users to select an exempt organization and check information about the organization, including whether they have had their exempt status automatically revoked.
RumboughCash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to several types of donated property, including cars, boats, clothing and household items. If you receive something in return for your donation, such as tickets, only the amount exceeding the fair market value of the item received can be deducted.
All contributions valued at $250 and above require additional documentation to be deductible. You should receive a written statement from the charity acknowledging your donation. The statement should include several items, such as the amount of cash or the description and fair market value of the non-cash item, and state whether or not the charity provided any goods or services in exchange for your donation. Items $500 or more require an additional tax form, Form 8283.
Deductions are allowed for donations only in the year they are actually made. Checks and credit card statements must show that the contribution was made on or before Dec. 31, even though you may not pay the bill or have your bank account debited until after Dec. 31.
Finally, when you are completing your tax return for the year, you can only claim these deductions if you itemize using Form 1040, Schedule A.
For more information on deductions, instructions for completing the required forms, and other information, go to www.IRS.gov and search for Publication 526, Charitable Contributions, and Publication 561, Determining the Value of Donated Property. You can also consult your tax professional.
– Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.