How to Get Charitable Contribution Tax Deductions
Taxpayers who itemize their personal deductions can get a charitable contribution deduction of up to 50 percent of adjusted gross income. To qualify for this deduction, the contribution must be made to a qualified 501(c)(3) nonprofit organization. There are several ways to make contributions, but they must be substantiated with the proper documentation.
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Instructions
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Give money. This is the most common form of charitable contributions and there is never a question of the value of the donation. Cash gifts of up to $250 require only a cancelled check as documentation. If you give more than this amount, you must have a contribution acknowledgement from the receiving organization that includes the date and amount of the contribution, as well as a statement that the donor did not receive any goods or services in exchange for the contribution.
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Donate non-cash items. Many people give clothing, household goods and other things they no longer need to qualified organizations. The IRS requires the items to be in good condition, but there is no clear definition of "good" in the IRS code. All non-cash donations require a receipt from the organization, and it is the taxpayer's responsibility to make a good faith estimate of the fair market value of the items at the time of the donation.
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Report non-cash donations with a total value of $500 or less directly on Schedule A. Non-cash contributions of $501 or more must be reported on form 8283, and you must include the name and address of the organization, the original value of the items, their fair market value, the method used to determine fair market value, and how you acquired the items. If the FMV is more than $5,000, an appraisal by a qualified appraiser must accompany form 8283.
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Make a donation of appreciated stock held for more than one year. You get a contribution deduction for the full market value of the stocks at the date of the contribution.
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Transfer a required minimum distribution from an IRA account to a qualified organization if you are a senior aged 70 or older. You pay no tax on the RMD. You will avoid paying tax on income you don't need, but you won't be able to take a contribution deduction for it. The IRS does not allow a double benefit in this case.
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Remember to claim any out-of-pocket expenses you pay for the benefit of a qualified organization. For example, if your church has a fund raising dinner and you buy food, paper goods or other items for the event, you can deduct the cost of these items. Be sure to keep your receipts or pay by check.
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Keep track of any charitable travel expenses or mileage you drive for a nonprofit. Commuting to and from the nonprofit's office does not count, however.
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References
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