Note: This information is about charitable contributions pertaining to tax year 2017. For information about tax year 2018, meet with Tom.
The Internal Revenue Service allows taxpayers to deduct cash and non-cash charitable donations to 501(c)(3) organizations. Donations to most organizations that are not a 501(c)(3) do not count as a charitable donation to the IRS, even if the donation is for a local fundraiser. There are some exemptions to this rule, however, including donations to local government institutions and non-profit schools. The IRS outlines what can and cannot qualify as a charitable contribution in IRS Publication 526.
Deduct these contributions on Schedule A, attached to the Form 1040 individual tax return.
For both cash and non-cash donations, taxpayers should receive a receipt from a charitable organization for any donation valued over $250. Do not lose this receipt as the IRS requires it as proof of donation, and most organizations will not reprint a new receipt.
Charitable cash contributions
Taxpayers wishing to deduct cash donations must maintain receipts of their cash donations as required by the IRS. Common 501(c)(3) organizations taxpayers donate to include their church, local boys and girls clubs, Goodwill, Salvation Army and some animal rescue organizations including Animal Humane Society.
Churches often are able to provide an end-of-year print out for all cash donations to the church for the tax year. Please contact your church for more information about print-outs.
The IRS requires donors to attach a value to their donated items. Record every item donated in a list with an item condition, description of the item and a value attached to each item. Include photographs of donated goods too, if possible. In addition to assisting you in remembering exactly what you donated, this will further act as proof to the IRS. Organizations such as Goodwill and Salvation Army have itemized lists available online to assist taxpayers in valuing commonly donated goods. Also, hang on to any donation receipts you obtain from charitable organizations to accompany your itemized valuation list.
Aside from being required by the IRS, taxpayers may find that by maintaining an itemized, value-assigned list that their donated items are worth more than they initially guessed. Do not guess, though, as the IRS requires a documented, itemized list.
If your claimed value exceeds $500, the Internal Revenue Service requires Form 8283 to be filed. If a taxpayer claims a non-cash donation of over $5,000, a qualified appraisal of the donation is also required.
To assist in filing tax year 2018 forms, include your itemized list when providing our firm with your tax documents. Our firm will not create fictitious values to assign with your non-cash donation forms. Meet with Tom if you have any further questions about charitable donations.