Making Charitable Donations this year?
Have you made a donation to charity this year? Do you plan to make one before December 31? Times are tough but people routinely give money to those with greater needs. The IRS just released more tips regarding a tax deduction on your 2010 personal tax return. Remember the following details:
- Make contributions to qualified organizations. Use IRS Publication 78, Cumulative List of Organizations from the IRS.gov website to point out the best candidates for your good intentions.
- You can only base your deduction on actual (rather than pledged) charitable contributions made by December 31; that is , during the tax year. Credit card charges and check payments are counted in the year they are dated; not when the charges are actually posted.
- Remember that many deductions are only available to taxpayers on IRS Form 1040 Schedule A. You have to itemize many deductions rather than take them as part of the standard deduction to reduce your taxable income.
- Though special rules apply for some donated property categories, you can typically deduct cash contributions and a property’s fair market value from your taxable income. Determine the eligibility of each contribution case by case.
- You can only calculate deductions for the value of your contribution that is IN EXCESS of the benefits you receive (tickets to a sports event, admission to a dinner, or fair market value of an object). Keep records of the contribution regardless of the amount of the deduction.
- Any contribution over $249 must have additional documentation such as written acknowledgment or receipt by the group or organization receiving your donation. These records must include the date, the exact amount, and description of the donation. If you make charitable donations over $499 you are required to complete IRS Form 8283, Noncash Charitable Contributions and attach it to your tax return. A written appraisal AND completion of Section B of the form are required for donations over $5,000. Organize your financial records.
More questions? Visit the IRS website, IRS.gov and download IRS Pub 526, Charitable Contributions or call the agency at 800-TAX-FORM (800-829-3676) for additional tax information.