If you are looking for a tax deduction, giving to charity can be a "win-win"
situation. It's good for them and good for you. Here are eight things you should know
about deducting your contributions to charity:
- You must donate to a qualified charity if you want to deduct the
contribution. You can't deduct contributions to individuals, political
organizations, or candidates.
- To deduct your contributions, you must file Form 1040 and itemize deductions.
- If you get a benefit in return for your contribution, your deduction is
limited. You can only deduct the amount of your contribution that's more than
the value of what you received in return. Examples of such benefits include
merchandise, meals, tickets to an event, or other goods and services.
- If you give property instead of cash, the deduction is usually that item's
fair market value. Fair market value is generally the price you would get if
you sold the property on the open market.
- Used clothing and household items generally must be in good condition to be
deductible. Special rules apply to vehicle donations.
- You must file Form 8283, "Noncash Charitable Contributions," if your
deduction for all noncash contributions is more than $500 for the year.
- You must keep records to prove the amount of the contributions you make
during the year. The kind of records you must keep depends on the amount and
type of your donation. For example, you must have a written record of any
cash you donate, regardless of the amount, to claim a deduction. It can be a
canceled check, a letter from the organization, or a bank or payroll
statement. It should include the name of the charity, the date, and the
amount donated. A cell phone bill meets this requirement for text donations
if it shows this same information.
- To claim a deduction for donated cash or property of $250 or more, you must
have a written statement from the organization. It must show the amount of
the donation and a description of any property given. It must also say
whether the organization provided any goods or services in exchange for the
This publication is distributed with the understanding that the author, publisher and
distributor are not rendering legal, accounting or other professional advice or
opinions on specific facts or matters, and, accordingly, assume no liability
whatsoever in connection with its use. The information contained in this newsletter
was not intended or written to be used and cannot be used for the purpose of (1)
avoiding tax-related penalties prescribed by the Internal Revenue Code or (2)
promoting or marketing any tax-related matter addressed herein. © 2014