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IRS Offers Tips for Year-End Giving

IRS Offers Tips for Year-End Giving

IRS Videos:   Exempt Organizations Select Check:  English | Spanish

                        Fair Market Value of Charitable Donations:  English | Spanish | ASL

Podcasts:       Exempt Organizations Select Check: English | Spanish

Individuals and businesses making contributions to charity should keep in mind some key tax provisions that have taken effect in recent years, especially those affecting donations of clothing and household items and monetary donations.

Rules for Clothing and Household Items

To be deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $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 any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

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 for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Reminders

To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:

  • Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2012 count for 2012. This is true even if the credit card bill isn’t paid until 2013. Also, checks count for 2012 as long as they are mailed in 2012.
  • Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. Exempt Organization Select Check, a searchable online database available on IRS.gov, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.
  • For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). 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. Use the 2012 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
  • For all donations of property, including clothing and household items, get from the charity, if possible, 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. Additional rules apply for a contribution of $250 or more.
  • 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. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
  • If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
  • And, as always it’s important to keep good records and receipts.

IRS.gov has Additional information on charitable giving including:

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Joe R January 02, 2013 at 11:23 PM
It just amazes me that we don't think twice about being taxed for something like public roads and the infrastructure. We pool all our tax money for a greater good and everyone benefits from having safe drivable roads. Some part of my federal taxes go for roads in other states via the interstate highway system and vice-versa for the residents in those states chipping in for roads that cross through NJ. But if we would do the same for health care, that's socialism, that's horrible, blah, blah, blah. I guess they also think that Social Security, Medicare, Medicaid and the VA (it is an example of the "S" word) are all socialism and so should be demolished.
Bill January 02, 2013 at 11:34 PM
@JoeR - They come out for ahead in your opinion. Essentially, you want the government to play nanny for you. Americans going bankrupt from medical is nothing more then BS propoganda. Has been debunked time and again. Why do people like yoiu insist on saying something is free? Do the doctors work for no pay in Europe ? How about the college professors ? Did I miss that in the news reports ? And yes, many countries now charge a small premium in addition to the taxes collected to cover that "free" healthcare. Germany charges 8% of wages. What services do they get that I could only dream about ? Please enlighten me ? PS - I work with Europeans, I've worked there, and I have family that still lives there. So spare me the BS remarks about where I get my info.
Bill January 02, 2013 at 11:38 PM
Because many of us believe the less the government is involved in the better our lives will be. I'm pretty sure there were some really smart men that thought that way a few hundred years ago. But I could be wrong.
stephen January 03, 2013 at 02:09 AM
Very useful information. Thanks for the tips. These should stay up on Patch in a visible spot until Tax Day.
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