Things To Know Before Deducting Charitable Contributions
When you make a contribution to charity, it not only helps those in need but it also provides you benefits at tax time. It is the gift that keeps on giving. The Express990 team would like to go over a few things to know before deducting your charitable contributions…
Qualified Charities
To deduct a contribution, you must donate to a qualified charity. You will not be able to deduct gifts to individuals, political organizations, or candidates. You can easily check the status of a charity via the IRS Select Check tool.
Itemized Deduction
You will need to file Form 1040 and itemize your deductions to deduct your contributions.
Benefit in Return
Your deduction is limited when you receive something in return for your donation. You will only be able to deduct the amount of your gift that is more than the value of what you got in return.
Donated Property
For property donated, the deduction is usually the item’s fair market value. If you sold the property on the open market, the price you would get would be your fair market value.
Donations of $250 or more
You will need a written statement from the charity you contributed to stating the donated cash or goods of $250 or more. On the statement, it must show the amount of the donation and/or a description of any property donated. If you were provided any goods or services in exchange for your donation, the statement will need that description as well.
Form 8283
If your deduction for all noncash gifts is more the $500 for the year, you will need to file Form 8283 – Noncash Charitable Contributions.
Records to keep
To prove the amount of contributions you made during the year, you must keep proper records. The IRS doesn’t exactly give a clear explanation of this other than, “the kind of records you must keep depends on the amount and type of your donation.” For more information on this particular subject, you should contact the IRS directly.
Always consult with your tax professional and/or the IRS when deducting charitable contributions.
