If you plan to make charitable contributions throughout the year, you’ll want to be sure to keep your records organized for next tax season. (Photo Credit office.microsoft.com)
Tax season is almost over, but you’ll want to stay organized for next year! If you plan to make charitable contributions throughout the year here are a few tips regarding what you’ll need in order to deduct those contributions:
Which Organizations Qualify?
You may only deduct contributions if they are made to legitimate qualified organizations. Donations to political organizations, candidates, or specific individuals don’t count. IRS Publication 526 can help you determine if an organization qualifies.
How do I Claim a Charitable Contribution?
How you claim your charitable contribution depends upon how much you donated. If noncash contributions exceed $500, then you must complete Form 8283, Noncash Charitable Contributions. If they are below $500 then you complete Form 1040, and itemize donations under Schedule A.
If your donation is valued at $5,000 or more, you must complete Section B of Form 8283.
What if I Received ‘Perks’ Because of My Donation?
If you received any perks in exchange for a donation (ie baseball tickets, merchandise, discounted or free services, etc.) then you may only deduct the amount that exceeds the fair market value of the perk you received.
So, if you donated $50 and, as a result of that donation you received two baseball tickets with a fair market value of $30, you may only deduct $20.
Do I Need to Keep Any Records of My Donations?
Yes! You must keep records of the items you donated. Below are examples of acceptable records:
- Cash, Check, Monetary Gifts Under $250 – You must keep a bank record, payroll deduction record, or written communication from the organization (this written piece must contain the name of the organization, as well as, the date and amount of the contribution).
- Cash, Check, Monetary Gifts Exceeding $250 – In addition to the items listed above, you also need documentation from the organization detailing whether you received any benefits or perks as a result of your donation.
- Text Message Donations – A phone bill is acceptable documentation, as long as, it details the date, the name of the organization, and a transcript of the donation amount.
Remember, keeping track of these items now will help reduce stress next year. If you have any questions, or need any additional information, please contact your H&S tax professional at 800.924.6891.
Forms + Sources
IRS Publication 561, Determining the Value of Donated Property
IRS Publication 526 (2011) Charitable Contributions
Form 8283, Noncash Charitable Contributions
