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The
IRS often puts charitable deductions under the
microscope. This area has been ripe for abuse in
the past, but the rules for establishing and
documenting gifts to charity were recently
tightened. As the deadline for filing 2012 returns
fast approaches, the IRS is reminding taxpayers
and practitioners about these requirements by
posting nine tips for securing charitable
deductions.
1.
To qualify for a deduction, a taxpayer must make
the donation to a qualified charitable
organization. You can't deduct contributions you
make to an individual, a political organization,
or a political candidate.
2.
Taxpayers must file Form 1040 and itemize
deductions on Schedule A. If the total deduction
for all noncash contributions for the year is more
than $500, taxpayers must also file Form
8283, Noncash Charitable Contributions,
with their tax return.
3.
If you receive a benefit of some kind in return
for your contribution, you can only deduct the
amount that exceeds the fair market value of the
benefit you received. Examples of benefits that
may be received in return for a contribution
include merchandise, tickets to an event, or other
goods and services.
4.
Donations of stock or other noncash property are
usually valued at fair market value. Used clothing
and household items generally must be in good
condition to be deductible. Special rules apply to
vehicle donations.
5.
Fair market value is generally the price at which
someone can sell the property (see sidebar).
6.
You must have a written record about your donation
in order to deduct any cash gift, regardless of
the amount. Cash contributions include those made
by check or other monetary method. That written
record can be a written statement from the
organization, a bank record, or a payroll
deduction record that substantiates your donation.
That documentation should include the name of the
organization, the date, and amount of the
contribution. A telephone bill meets this
requirement for text donations if it shows this
same information.
7.
To claim a deduction for gifts of cash or property
worth $250 or more, the taxpayer must obtain a
written statement from the qualified organization.
The statement must show the amount of the cash or
a description of any property given. It must also
state whether the organization provided any goods
or services in exchange for the gift.
8.
You may use the same document to meet the
requirement for a written statement for cash gifts
and the requirement for a written acknowledgement
for contributions of $250 or more.
9.
If a taxpayer donates one item or a group of
similar items that are valued at more than $5,000,
Section B of Form 8283 must be completed. This
section generally requires an appraisal by a
qualified appraiser.
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