Last Minute Charitable Deductions, Even Basics Not so Simple

Helping others elevates r spirit. Sharing r as the holiday nears will lift the spirit of others. It may even lower r bill if itemize deductions and properly docum r giving. Unfortunately, IRS rules regarding deductable contributions are not as simple as they may seem. Today, I will discuss these rules and the documation the IRS will require for to prove r deduction. My goal is to help minimize r es so can maximize r giving without running afoul of rules.

Definition: A deductible charitable contribution is a donation of money or property to a “qualified organization.” The contribution must benefit the organization and not be set aside for any specific individual. Qualified organizations include (but are not limited to) churches, synagogues and other religious organizations, public parks and governm ities (if contribution used to benefit public), nonprofit schools, hospitals and volunteer fire departms, and not-for-profit public charities such as the ASCPA, Salvation Army, or the Boys and Girls Club. Other than churches and governms, most organizations must apply and be recognized as “qualified” by the IRS. A list of these organizations can be found in IRS Publication 78.

To qualify as a charitable contribution, the giver cannot receive anything of “tangible” value in return. For example, if purchase tickets to a charity dinner for $100 and the value of the dinner is $50, can only deduct $50 as a charitable contribution. If give the organization more than $75 and receive any s or services in return, the organization must give a statem that breaks down the deductible and nondeductible portions of the gift.

What proof will need to substantiate r donations? Here is a quick rundown:

Contributions by cash and check: Over the past few , the IRS has tightened their stance on charitable “cash” giving. The days of deducting the “twy” anonymously tossed in the church collection plate (or Salvation Army bucket) are long gone. Those who donate cash must obtain a receipt from the organization to claim a deduction. Donations made by check can be substantiated with a cancelled check. If donate $250 or more to any organization in one day, however, a cancelled check will not be enough. A written receipt will be required to prove r donation. Year-end statems provided by the organization will generally suffice for this purpose.

Household s such as furniture, tools and clothing: As for s and Christmas decorations, may have the opportunity to clear r garage and closets of items can donate to charity. To be deductible, these items must be in “ used condition.” If they are, their “fair market value” (what the item would sell for at a yard sale or thrift shop) can be deducted. It is, however, r responsibility to retain proof of the donated items and their value. Writing “three bags of clothes” on r receipt will do little to help substantiate r donation if the IRS should question it.

To prove r noncash donations, consider the following steps: 1) Take a picture of the donated items. This will help prove the items donated and their condition; 2) List donated items on a sheet of notebook paper, and 3) Use a valuation guide (free at http//:salvationarmyusa.org or http//:will.org) to estimate each item’s fair market value. These will also help complete form 8283, “Noncash Charitable Contributions,” if total noncash contributions exceed $500.

This article has discussed the basics of deducting charitable contributions. There remain, however, many deduction limits and reporting requirems d to income level, nature of donated items (such as vehicles or appreciated property), organization’s use of donation, and type of organization donated to. In my next column I’ll discuss these rules as they to the donation of vehicles. As always please remember that this or any article does not constitute or replace the advice of a qualified professional. If have any questions regarding r charitable giving or any other issue, please feel free to call our office are (304) 267-2594 to speak with a professional.

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