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Financial Planning > Charitable Giving

IRS Offers Useful Reminders for Charitable Giving

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The IRS has issued another round of useful tips for individuals and businesses that plan to contribute to charity during the current giving season.

The agency several times a year supplements its user-friendly website with advice about specific topics.

On Wednesday, the IRS again emphasized the importance of scrupulous record keeping of all contributions to nonprofit organizations that taxpayers will need to file their 2013 tax return, including canceled checks, pay stubs and acknowledgements of gifts received by charities.

It also gave some additional reminders about charitable contributions, in particular to key provisions regarding noncash donations that have taken effect in recent years.

Clothing and household items–including furniture, furnishings, electronics, appliances and linens–donated to charity generally must be in good used condition or better. However, such an 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.

If a donation is left at a charity’s unattended drop site, the donor should keep a written record of each item 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. Additional rules apply for a contribution of $250 or more, the IRS said.

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

Taxpayers who deduct more than $500 for all noncash contributions must submit a properly completed Form 8283 with their tax return.

The IRS reminded taxpayers that they can claim tax deductions only for donations to qualified organizations, most of which can be found on its searchable online database. However, some entities eligible to receive deductible donations may not appear on the database, including synagogues, churches, temples, mosques and government agencies.

Finally, the IRS once again noted that only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions.

A taxpayer will realize a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use of the 2012 Form 1040 Schedule A can help determine whether itemizing is better than claiming the standard deduction, the IRS said.


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