Tax Topic

Charitable Contributions (you must have a receipt)

To be deductible as a charitable contribution, your donation must be made to bona fide charitable organization. Donations to family members or friends in need are not tax deductible -- they are instead considered non-deductible gifts and must be less than $14,000 (2016) or $14,000 (2017) per person per year to avoid gift tax complications.

Generally, the limit is 50% of your AGI (generally your total income before deductions and exemptions), although lower limits apply for certain types of contributions. Contributions must be separated between cash (cash/check) contributions and non-cash contributions, and you must substantiate your charitable contributions either way in most cases. For non-cash donations (Salvation Army, Goodwill, etc.) you are allowed to take as a deduction the lower of either your cost or the fair market value (what we refer to as "garage sale value") of the items being donated. Here is a link to a Salvation Army website the IRS recommends using to help determine appropriate values for used items: http://satruck.org/donation-value-guide

For any cash/check contribution less than $250, all you need is a cancelled check or a receipt from the receiving organization. If you give $250 or more to any one organization you need an acknowledgement from the receiving organization. The acknowledgement must include the amount of cash donated and indicates whether you received any goods or services (with good faith estimates of value) in connection with the donation.

For non-cash contributions, if the value of a single "lot" is less than $250 a receipt/acknowledgment from the charitable organization is required, unless it is impractical to get one (e.g., you leave your items at a drop box). We need all of the following for each contribution to prepare your tax return properly: name and full address with zip code of the organization, date donated, reasonably detailed description of the items given, fair market value, and method for determining the fair market value or cost basis if less (if you don't provide this information, we have to ask you for it which takes more time). If the value of any single "lot" is $250 or greater, the acknowledgement must also indicate whether the organization gave you any goods or services as a result of your contribution and the description and value of any goods or services given. If the organization provided any intangible religious benefits, they must include a statement to that effect.

If the total of your non-cash charitable contributions exceed $500, we need all the same information as with the lot-greater-than-$250 plus how you acquired the donated items (most often "purchased") and when. To determine the $500 threshold, combine your claimed deductions for all similar items of property donated to one or more charitable organization during the year. If you have non-cash charitable contributions over $5,000 in the aggregate for one year, you must generally obtain a qualified written appraisal in addition to the acknowledgment and written records previously mentioned.

Form 8283 must be completed for all donations over $500. It will be very helpful if you complete this form when you have non-cash charitable contributions exceeding $500: http://www.irs.gov/pub/irs-pdf/f8283.pdf

For payroll deductions you must keep a paystub, W-2 or other document furnished by your employer that shows the date and amount of the contribution AND a pledge card or other document prepared by or for the qualified organization that shows the name of the organization. If you make a contribution by payroll deduction and your employer withheld $250 or more from a single paycheck, you must also keep documentation from the organization that states the organization does not provide goods or services in return for any contribution made to it by payroll deduction. A single pledge card may be kept for all contributions made by payroll deduction regardless of amount as long as it contains all the required information.

There are special rules about certain kinds of charitable contributions, e.g., appreciated stocks or other property. For more details on this complex subject, here is a link to IRS Publication 526, Charitable Contributions: http://www.irs.gov/pub/irs-pdf/p526.pdf

And lastly, know that political contributions of any kind are not tax deductible. Do not include them with your charitable deductions.

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