Action Line: Tax deduction rules govern donations to charities
BY PHIL MULKINS World Action Line Editor
Friday, August 24, 2012
8/24/12 at 4:45 AM
Dear Action Line: What are the guidelines on donating clothing and other items to charities, as far as how much you can deduct? - S.P., Tulsa
Contributing money and property are ways to support charitable causes, but before your donation becomes tax-deductible you must determine the charity's tax-exempt status, the fair market value of the goods and meet other conditions.
Tax-exempt status: Contributions must be made to qualified charitable organizations to be deductible. Ask the charity about its tax-exempt status, or look for it in the "Exempt Organizations Select Check" ( tulsaworld.com/IRSTaxExempt), an online search tool that allows you to select an exempt organization and check its federal tax status as well as information on tax forms that organizations may file.
Itemizing: Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A ( tulsaworld.com/IRSCharityItemize).
Fair market value: Cash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to cars, boats, clothing and household items. If you receive something in return for your donation, such as merchandise, goods, services or admission to a charity banquet or sporting event, only the amount exceeding the fair market value of the benefit received can be deducted. See Form 8283 ( tulsaworld.com/IRSFairMarketValue).
Record-keeping: Keep records of any donation you make, regardless of amount. Cash contributions must be documented to be deductible. Canceled checks, bank or credit card statements, payroll deduction records, or written statements from the charity (including its name, contribution date and amount) fulfill the record-keeping requirement.
Large donations: Contributions valued at $250 or more require a written statement from the charity stating the amount of cash donated or a description and fair market value of donated property. It should also say whether the charity provided any goods or services in exchange for it. Non-cash items valued at $500 or more require "Form 8283, Noncash Charitable Contributions" be attached to your return. Contribution of non-cash property worth more than $5,000 requires that a property appraisal be attached to your return, with Form 8283.
Timing: Donations to qualified charities are deductible only in the tax year they are made. Year-end donations by check or credit card are tax-deductible for that tax year, even when you don't pay the credit card bill or have your bank account debited until after Dec. 31.
More information: See "Publication 526, Charitable Contributions" ( tulsaworld.com/IRSPub526) and "Publication 561, Determining the Value of Donated Property" ( tulsaworld.com/IRSPub561). These are also available by calling 800-829-3676.
Original Print Headline: Rules govern tax deductions for donations
Submit Action Line questions by calling 918-699-8888, emailing phil.mulkins@tulsaworld.com or by mailing them to Tulsa World Action Line, P.O. Box 1770, Tulsa, OK 74102-1770.
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