While the spirit of giving seems to grow during the holiday season, the IRS reminds taxpayers to keep some important points in mind when making donations with the expectation of deducting them on a federal tax return.
Taxpayers can deduct donations only if they make them to a qualified tax exempt organization.
"The IRS website allows taxpayers to search for many charitable organizations online with Publication 78," said IRS spokesperson Luis D. Garcia. “Qualified organizations can include non profit groups that range from religious to scientific, charitable to educational, or that work to prevent cruelty to children or animals. Generally, organizations will be able to tell you whether they are federally tax exempt and eligible to accept tax-deductible donations."
Garcia added that it is necessary to file Form 1040 and itemize deductions on Schedule A to receive a charitable contribution deduction. Good record keeping is important too.
To deduct any charitable donation of money, a taxpayer must have a bank record, credit card statement or a written communication from the charity showing the name of the charity and the date and amount of the contribution. A bank record includes canceled checks, bank or credit union statements. Bank or credit union statements should show the name of the charity and the date and amount donated. Credit card statements should show the name of the charity, the transaction posting date and the amount donated. Prior law allowed taxpayers to support their donations of money with personal bank registers, diaries or notes made around the time of the donation. Those types of records are no longer sufficient.
For all donations of property, including clothing and household items, obtain 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. If a donation is left at a charity’s unattended drop site, keep a written record of the donation 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.
To deduct charitable contributions of items valued at $250 or more you must have a written acknowledgment from the qualified organization.
To deduct charitable contributions of items valued at $500 or more you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your tax return.
To be deductible, clothing and household items such as furniture, furnishings, electronics, appliances, and linens donated to charity must be in good used condition or better. Any clothing or household item for which a taxpayer claims a deduction of over $500 does not have to be in good used condition or better if the taxpayer includes a qualified appraisal of the item with the return.
More information about charitable donations can be found in IRS Publication 526: http://www.irs.gov/publications/p526/index.html
To search for a qualified charity visit our Publication 78 site: http://www.irs.gov/charities/article/0,,id=96136,00.html
Other forms and publications can be found at IRS.gov, or requested by calling, toll-free, 1-800-TAX-FORM.