Year-End Giving Tips, Compliments of the IRS

Rules for Clothing and Household Items

Clothing and household items donated to charity generally must be in good used condition or better in order to be deductible. A clothing or household item for which a taxpayer claims a deduction of more than $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 a charitable donation of money, of whatever amount, a taxpayer must have a bank record or a written communication from the nonprofit that shows the name of the charity and the date and amount of the contribution. 

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 do not change the requirement that a taxpayer obtain a charity’s acknowledgment for each deductible donation of $250 or more. However, one statement may meet both requirements. 

Additional Reminders

The IRS also offered these reminders:

• Contributions are deductible in the year made. This includes donations charged to a credit card before the end of 2011 and checks mailed in 2011.

• Only donations to qualified organizations are tax-deductible. IRS Publication 78, searchable and available online, lists most organizations that are qualified to receive deductible contributions. Churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in Publication 78.

• Only individual taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. 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.

• For all donations of property, including clothing and household items, try to get from the charity a receipt that includes the name of the charity, date of the contribution and a reasonably-detailed description of the donated property. Keep a written record of a donation left at a charity’s unattended drop site 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.

• The deduction for a motor vehicle, boat or airplane donated to charity with a claimed value of more than $500 is usually limited to the gross proceeds from its sale. The organization must provide the donor Form 1098-C, or a similar statement, and this must be attached to the donor’s tax return.

• If the amount of a taxpayer’s deduction for all noncash contributions is more than $500, a properly-completed Form 8283 must be submitted with the tax return.