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.
- 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 www.IRS.gov.
- You must itemize Charitable
contributions are deductible only if you itemize deductions using Form
1040, Schedule A.
- 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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.