Charitable Donations

Charitable Donations

If you itemize your deductions (use Schedule A), Uncle Sam will give you a bonus – a deduction on your tax return for donating all that stuff to a charity. This could result in a larger refund for you, but there are a few simple rules for charitable donations you must follow to benefit from this tax break. First, the charity must be recognized as an exempt charitable entity. Qualifying are churches, schools, Red Cross, Amvets, Scouts, Salvation Army, Disabled American Vets, public libraries, etc. Contributions to foreign organizations are generally not eligible to be claimed as a charitable contribution (except certain Canadian, Israeli and Mexican charities). If in doubt, check the IRS Search For Charities search tool to see if the organization is eligible for tax-deductible charitable contributions.Second, make sure you get a receipt from the charity for the charitable donations. You’ll need it as proof of your donation. If your total non-cash charitable donations are less than $500, you can list the amount on Schedule A. If more than $500, you are required to attach Form 8283 with the following information:Make a list of the charitable donations to attach to your receipt. (Keep this receipt with your records – do not send in). Form 8283 asks for date of purchase (can be various) and the date of the gift, the name of the charity and a list of the items donated.  Additionally, you must indicate how you determined fair market value. Cost is what you originally paid for the items and value is what you could have sold it for at a thrift shop or garage sale.Think of all those kitchen appliances no longer used; old toys the kids have outgrown; clothes that don’t fit or are out of date; books, tools, games, furniture and anything else you no longer want. It is fairly easy to rack up $1000 in fair market value resulting in an additional refund of $250 if you are in the 25% tax bracket.  Remember that clothing must be in above average condition – no old socks, underwear and soiled clothes you used for painting!  So, get busy – get rid of the extra stuff, simplify your life and enjoy that larger refund!If you have questions about charitable donations or other tax matters, please visit the Tax Samaritan website or contact us with your specific questions.Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.  Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs. Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on U.S. taxation.