Deducting Charitable Contributions at Tax Time.
Many of us do good during the year, making both cash and non-cash contributions to charitable organizations. We often forget however, that we are able to take a tax deduction for those items we donated come tax time. To do this, a little housekeeping is necessary.
- First off, to take the deduction, you must itemize your deduction on Schedule A. Your itemized deductions must exceed your standard deduction in order for it to be of greater benefit to you, than your standard deduction.
- The contribution must be made to a qualified organization, not to an individual, political organization or political candidate.
- The cost of games of chance, raffles or bingo cannot be deducted, and if you get merchandise or admission to an event in exchange for your donation you will need to deduct the fair market value of the merchandise or ticket price you received from the donation amount, to determine the dollar amount that can be used as a deduction.
- If you donate stock, it is generally valued at the fair market value.
- The old stuff from your kitchen or your linen closet that you wouldn't give to another family member does not qualify for a deduction. Donated household items and clothing must be in good condition to qualify.
- Written bank records or records from the receiving organization are required and should be retained. It should indicate what the donation was, the date it was made and the dollar amount of the donation. If your donation exceeds $250, the organization needs to indicate whether you received benefits in exchange for your contribution.
- If your total contributed property is greater than $500, IRS form 8283 will be required.
- If the value of your total contributed property is greater than $5000 IRS form 8283 will also be needed and items must be appraised by a qualified appraiser.
- You cannot deduct the time or value of your sevices, however you can deduct the items used while carrying out the charitable service.
- You can also deduct the miles driven to provide charitable deeds or donate products. In 2009, the rate is 14 cents per mile.
So keep doing good, keep good records and watch as your tax liability is whittled away.