IRS Offers Tips For Year-End Giving
By: Blake Deshazo
Updated: December 20, 2012
WASHINGTON
-- Individuals and businesses making contributions to charity should
keep
in mind some key tax provisions that have taken effect in recent years,
especially those affecting donations of clothing and household items and
monetary donations.
Rules for Clothing and Household Items
To
be deductible, clothing and household items donated to charity
generally must be
in good used condition or better. A clothing or household item for which
a taxpayer claims a deduction of over $500 does not have to meet this
standard if the taxpayer includes a qualified appraisal of the item with
the return. Household items include furniture,
furnishings, electronics, appliances and linens.
Guidelines for Monetary Donations
To
deduct any charitable donation of money, regardless of amount, a
taxpayer must
have a bank record or a written communication from the charity showing
the name of the charity and the date and amount of the contribution.
Bank records include canceled checks, bank or credit union statements,
and credit card statements. Bank or credit union
statements should show the name of the charity, the date, and the amount
paid. Credit card statements should show the name of the charity, the
date, and the transaction posting date.
Donations
of money include those made in cash or by check, electronic funds
transfer,
credit card and payroll deduction. For payroll deductions, the taxpayer
should retain a pay stub, a Form W-2 wage statement or other document
furnished by the employer showing the total amount withheld for charity,
along with the pledge card showing the name
of the charity.
These
requirements for the deduction of monetary donations do not change the
long-standing
requirement that a taxpayer obtain an acknowledgment from a charity for
each deductible donation (either money or property) of $250 or more.
However, one statement containing all of the required information may
meet both requirements.
Reminders
To help taxpayers plan their holiday-season and year-end giving, the IRS offers the
following additional reminders:
- Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2012 count for 2012. This is true even if the credit card bill isn't paid until 2013. Also, checks count for 2012 as long as they are mailed in 2012.
- Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. Exempt Organization Select Check, a searchable online database available on IRS.gov, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.
- For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2012 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
- For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity's unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
- The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor's tax return.
- If the amount of a taxpayer's deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
- And, as always it's important to keep good records and receipts.
IRS.gov has Additional information on charitable giving including:
- Charities & Non-Profits
- Publication 526, Charitable Contributions
- Online mini-course, Can I Deduct My Charitable Contributions?
