Over the last few years, IRS auditors have been
focusing on charitable contributions.
The IRS is always
suspicious that taxpayers are inflating their
charitable deduction amount (I first wrote about this on my 3/1/12 blog titled IRS
Declares War on Charitable Contributions). Failing to follow the strict letter of the
tax law and IRS regulations will result in your deduction being disallowed.
The IRS recently posted a reminder on its
website featuring nine tax deduction tips (IRS Tip 2013-45 04/01/13):
qualify for a deduction, you must make the donation to a qualified charitable
organization. You can’t deduct
contributions made to an individual, a political organization, or a candidate.
taxpayer must file Form 1040 and claim itemized deductions on Schedule A. They must also must file Form 8283 for
non-cash charitable deductions that exceed $500 for the year.
you receive a benefit of some kind in return for your contribution, you can
only deduct the amount that exceeds the fair market value of the benefit you
receive. An example of this is reducing
your donation by the value of a meal you receive at the event.
of stock or other non-cash property are usually valued at fair market
value. Used clothing and household items
need to be in good condition. Special
rules apply to vehicle donations.
market value is generally the price you would receive if you sold the item.
must have a written record of your donation to deduct any cash gift, regardless
of the amount. The documentation should
include the name of the organization and the date and amount of your
gifts above $250, you must obtain a written statement from the qualified
organization detailing the amount of the cash donation or a description of any
property given. It must also state
whether the organization provided any goods or service in exchange for the
may use the same document to meet the requirements of a written statement for
any cash gift and a written acknowledgement for contributions of $250 or more.
a taxpayer donates one item or a group of similar items that are valued at more
than $5,000, Section B of Form 8253 must be completed. Be sure to obtain an appraisal from a
qualified professional before making a donation of this size.