Tax Tips for Charitable Contributions
Charitable contributions may help lower your tax bill
Do you want to lower your tax bill? One way you can do that is by making charitable contributions. Here are a few tips to ensure your contributions pay off when you file your tax return:
- You must give to a qualified organization:
- Ask a representative from the organization you’re planning to give to about their federal tax status.
- Visit www.irs.gov/charities to search for organizations that are eligible to receive deductible charitable contributions
- Call the IRS at 1-877-829-5500 to find out if an organization is qualified. People who are deaf, hard of hearing or have a speech disability and have access to TTY/TDD equipment can call 1-800-829-4059.
- You cannot take a deduction for contributions made to specific individuals, political organizations or candidates, and you must file Form 1040 and itemize the deduction on Schedule A.
- If you receive a benefit because of your contribution, such as merchandise, tickets to a ball game, dinner or other goods and services, you can deduct only the amount that exceeds the fair market value of the benefit 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. Special rules apply to vehicle donations.
- Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
- Regardless of the amount, to deduct a contribution of cash, check or other monetary gift, you must maintain a bank record, payroll deduction record or a written communication from the organization that contains the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the recordkeeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given.
- To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction record or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. 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 noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash 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.
Created: December 2015