Individuals who make gifts to charities can claim an itemized deduction for such contribution if the following rules are satisfied. The following is a mere overview of the income tax rules in this area. For more on what can happen when these rules are not follwed please read IRS Slams Taxpayers: Attention to Tax Details Matter
To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Generally, such organizations must be tax qualified with the IRS.
A taxpayer cannot deduct contributions made to specific individuals, political organizations and candidates.
See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit you have received.
Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible.
Fair market value is generally the price at which property would change hands between a hypothetical willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. This is the basic, textbook definition, but it basically means that a determination must be made of the true value of the gifted property. In some cases this determination must be made by a qualified appraiser and a qualified appraisal must be determined and documented.
Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain:
To claim a deduction for contributions of cash or property equaling $250 or more you must have the following:
One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
If your total deduction for all non-cash contributions for the year is over $500, you must complete and attach IRS Form 8283, Non-cash Charitable Contributions, to your return.
Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
This requirement does not apply to stocks or securities that are traded on a established securities market.
The value of services rendered to any charitable organization is not deductible.
However, the following unreimbursed expenses related to those services are deductible:
For more information on charitable contributions, refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining value, refer to Publication 561, Determining the Value of Donated Property.
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