Qualified Charitable Contribution Rules.
In order to claim a charitable donation, you must itemize your tax deductions. The donation must be given to a qualified non-profit organization that has a 501(c)(3) status. Contributions to civic leagues, social clubs, chambers of commerce and individuals are not deductible. Generally, the limit for contributions is 50% of your adjusted gross income. For capital gain property donated to 50% limit organizations, the limit is 30% and 20% for all other organizations. The IRS requires accurate documentation to substantiate your claims. If appropriate documentation is lacking during an IRS audit your donation will be disallowed.
- Keep the following records for any amount of cash contributions you donate: either a canceled check, bank statement or credit card statement with the amount, the date the contribution was given and the name of the organization. Usually the organization you donate to will send you written acknowledgement of your charitable donation.
- If your cash donation is $250 or more, you must have written acknowledgement from the organization that includes: (1) amount of the contribution, (2) whether you received any goods or services in return and (3) a description and good faith estimate of the goods or services you received in return.
- For non-cash charitable contributions less than $250, you need to get a receipt showing (1) name of the organization, (2) date of contribution and (3) detailed description of the property donated. In addition, you must keep your own record of the organization, the date of the donation, a description of the items and their fair market value. Fair market value is best described as what you would expect to pay for the item at a consignment or thrift shop. Generally you can only deduct the value of items that are in good used condition or better.
- If your non-cash donation is $250 or more, you must have written acknowledgement from the organization that includes the same info required for donations less than $250 and: (1) whether you got any goods or services in return for your contribution and (3) a description and good faith estimate of what you received in return.
- If you donate a single item worth more than $500, you need to be able to show how you got the item, the date you obtained it and how much it cost you. If your donation is over $5000, you need a qualified written appraisal.
- Generally, if you donate a vehicle to a qualified organization and claim a deduction of more than $500, you can deduct the smaller of (1) the gross proceeds from the sale of the vehicle by the organization or (2) the vehicle’s fair market value on the date you made the contribution. You must also attach form 1098-C or equivalent on your return.
- If the total value of all your non-cash donations is greater than $500, then you also need to fill out IRS form 8283. Written acknowledgement from qualified organizations must be received on or before you file your return including extensions.
- For service you give to qualified organizations you are able to write off non-reimbursed expenses and mileage. Keep a notebook in your car and record the date, the name of the organization, the beginning and ending mileage, where you were going, what you purchased on behalf of the organization and how much it cost.