When you make a donation to a charity, the donation can be tax deductible if certain conditions are met. The main consideration is that you are donating to a charity that is qualified by the Internal Revenue Service. Receipts for donations and, in some cases, appraisals can also be an important part of making deductible donations. Good records are essential in case of an audit.
Select the charity you wish to make a donation to. If being able to deduct the amount of your gift is important to you, refer to IRS Publication 78 to make sure your charity is included. This publication lists all IRS qualified charitable organizations in the U.S., although there are some exceptions. Both religious and government organizations are approved to accept contributions, but they might not be listed.
Keep receipts for all donations. All donations can be given at only the fair market value, which means your donations are worth only what a buyer would be willing to pay for the items at the time you donated them. Only drop off goods at attended donation stations so you can get a receipt.
Subtract the fair market value of any donations involving the purchase of merchandise or tickets to a benefit event from the amount you paid. You can only take a deduction for the difference between what the item would have cost as a fair market item and what you paid.
Maintain bank or payroll records if you are claiming a deduction of more than $250 for any one donation. A total of more than $500 for the year also requires you to fill out “IRS Form 8283, Noncash Charitable Contributions” to claim the amount. Written acknowledgement from the charity for the donation should accompany any large amounts, and will usually suffice in lieu of bank records.
Get an appraisal before donating for any item or group of items with a value of more than $5,000. You will need to enter the appraisal amount on Form 8283, Section B, and submit the appraisal as supporting documentation.
You must file a Form 1040 for your taxes if you wish to claim deductions. Include Form 8283 if necessary. All deductions must be itemized on Schedule A of the 1040 in order to qualify.
- When donating items such as a car or boat, ask the charity if they have an appraiser that will handle the appraisal for free, or a reduced fee.
- Excessively large donations may trigger an audit. Check with a tax professional before making charitable donations that are significantly larger than those you usually make.
Items you will need
- IRS Form 1040
- Schedule A
- Form 8283
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