deduction for it on your 2011 tax return. Here are the top nine things the IRS
wants every taxpayer to know before deducting charitable donations.
- Make sure the organization qualifies Charitable contributions must be made to qualified
organizations to be deductible. You can ask any organization whether it is
a qualified organization or check IRS Publication 78, Cumulative List of
Organizations. It is available online at the IRS. - You must itemize
Charitable contributions are deductible only if you itemize deductions
using Form 1040, Schedule A. - What you can deduct You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
- When you receive something in return If your contribution entitles you to receive
merchandise, goods, or services in return – such as admission to a charity
banquet or sporting event – you can deduct only the amount that exceeds
the fair market value of the benefit received. - Recordkeeping Keep good records of
any contribution you make, regardless of the amount. For any cash
contribution, you must maintain a record of the contribution, such as a
cancelled check, bank or credit card statement, payroll deduction record
or a written statement from the charity containing the date and amount of
the contribution and the name of the organization. - Pledges and payments
Only contributions actually made during the tax year are deductible. For
example, if you pledged $500 in September but paid the charity only $200
by Dec. 31, you can only deduct $200. - Donations made near the end of the year Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the
credit card bill or have your bank account debited until the next year. - Large donations
For any contribution of $250 or more, you need more than a bank record.
You must have a written acknowledgment from the organization. It must
include the amount of cash and say whether the organization provided any
goods or services in exchange for the gift. If you donated property, the
acknowledgment must include a description of the items and a good faith
estimate of its value. For items valued at $500 or more you must complete
a Form 8283, Noncash Charitable Contributions, and attach the form to your
return. If you claim a deduction for a contribution of noncash property
worth more than $5,000, you generally must obtain an appraisal and
complete Section B of Form 8283 with your return. - Tax Exemption Revoked Approximately 275,000 organizations automatically lost
their tax-exempt status recently because they did not file required annual
reports for three consecutive years, as required by law. Donations made
prior to an organization’s automatic revocation remain tax-deductible.
Going forward, however, organizations that are on the auto-revocation list
that do not receive reinstatement are no longer eligible to receive
tax-deductible contributions.
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