IRS Publication 526 – Charitable Contributions
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IRS Publication 526 – Charitable Contributions

IRS Publication 526 – Charitable Contributions

This post is a brief review of IRS Publication 526. Basically if your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Don’t get duped.  You cannot deduct contributions made to specific individuals, political organizations or candidates. 

Regardless of the amount donated when deducting a contribution to a qualified organization be sure to maintain a bank record, payroll deduction record or a written communication from the organization containing the name of the organization and the date and amount of the contribution as substantiation in your tax file showing specifically the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.

The deduction is claimed by filing IRS Form 1040 and itemizing deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return. If you donate an item or a group of similar items valued at more than $5,000 you must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.

If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.

Donations of stock or other non-cash property are usually valued at the fair market value of the property as of the date of the donation. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Special rules apply to vehicle donations.