Nine Tips for Charitable Taxpayers

If you make a donation to a charity this year, you may be able to take a
deduction for it on your 2011 tax return. Here are the top nine things the IRS
wants every taxpayer to know before deducting charitable donations.

  1. Make sure the
    organization qualifies
    Charitable contributions must be made to qualified
    organizations to be deductible. You can ask any organization whether it is
    a qualified organization or check IRS Publication 78, Cumulative List of
    Organizations. It is available at
  2. You must itemize Charitable
    contributions are deductible only if you itemize deductions using Form
    1040, Schedule A.
  3. What you can deduct You generally can
    deduct your cash contributions and the fair market value of most property
    you donate to a qualified organization. Special rules apply to several
    types of donated property, including clothing or household items, cars and
  4. When you receive
    something in return
    If your contribution entitles you to receive
    merchandise, goods, or services in return – such as admission to a charity
    banquet or sporting event – you can deduct only the amount that exceeds
    the fair market value of the benefit received.
  5. Recordkeeping Keep good records of
    any contribution you make, regardless of the amount. For any cash
    contribution, you must maintain a record of the contribution, such as a
    cancelled check, bank or credit card statement, payroll deduction record
    or a written statement from the charity containing the date and amount of
    the contribution and the name of the organization.
  6. Pledges and payments Only contributions
    actually made during the tax year are deductible. For example, if you
    pledged $500 in September but paid the charity only $200 by Dec. 31, you
    can only deduct $200.
  7. Donations made near the
    end of the year

    Include credit card charges and payments by check in the year you give
    them to the charity, even though you may not pay the credit card bill or
    have your bank account debited until the next year.
  8. Large donations For any contribution of
    $250 or more, you need more than a bank record. You must have a written
    acknowledgment from the organization. It must include the amount of cash
    and say whether the organization provided any goods or services in
    exchange for the gift. If you donated property, the acknowledgment must
    include a description of the items and a good faith estimate of its value.
    For items valued at $500 or more you must complete a Form 8283, Noncash
    Charitable Contributions, and attach the form to your return. If you claim
    a deduction for a contribution of noncash property worth more than $5,000,
    you generally must obtain an appraisal and complete Section B of Form 8283
    with your return.
  9. Tax Exemption Revoked Approximately 275,000
    organizations automatically lost their tax-exempt status recently because
    they did not file required annual reports for three consecutive years, as
    required by law. Donations made prior to an organization’s automatic
    revocation remain tax-deductible. Going forward, however, organizations
    that are on the auto-revocation list that do not receive reinstatement are
    no longer eligible to receive tax-deductible contributions.
This entry was posted in Individual, Nonprofits, Taxation. Bookmark the permalink.

Leave a Reply