Napier & Company, LCC

Tips for Taxpayers Making Charitable Donations

One of the most common itemized deductions taken by individual taxpayers is donations made to charitable organizations. Here are some items taxpayers need to know before deducting charitable donations.

• Contributions must be made to qualified organizations to be deductible.

• Contributions are deductible only if you itemize deductions.

• You generally can deduct cash contributions and non-cash contributions. For non-cash contributions, you deduct the fair market value of the donated property.

• If you receive goods or services in return for a contribution, you can only deduct the amount that exceeds the fair market value of the good or service received.

• Keep good records of any contribution you make. For contributions made in cash, you should maintain a record of the contribution. This should always include a written record from the charity. You may also want to keep bank records on the donation.

• Contributions actually made during the tax year are deductible. Include credit card charges and payments by check in the year they are given to the charity, even though you may not pay the credit card bill or the check has not cleared the bank until the next year.

• For any contribution of $250 or more, you must have written acknowledgment from the organization to substantiate the donation. Written proof must include the amount of cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift.

• An appraisal generally must be obtained if you claim a deduction for a contribution of noncash property worth more than $5,000. You must fill out Section B of Form 8283 and attach the form to your return.

Please let us know if you have any questions.