If you donate cash, checks, or other monetary gifts, regardless of the amount, you must have a bank record or written communication from the organization you donate to. This needs to show its name and the date and amount of donation.
If a contribution is worth $250 or more, stricter substantiation requirements apply. For these, you must have a written receipt from the charity that shows the amount of cash contributed.
It must also state whether the charity provided any goods or services in return. If they did, you must give a good faith estimate of the value of the goods or services you received. If you receive items in return for your contribution, such as a dinner or theater tickets, your deduction is limited to the excess of what you gave over the value of what you received. For example, if you gave $100 and in return received a dinner worth $30, you can deduct $70.
For a contribution of property other than money, you generally must have a receipt from the charity that shows the organization's name, the date and location of the contribution, and a detailed description, but not the value of the property contributed.
In general, if the total charitable deduction you claim for non-cash property is more than $500, you must attach a completed Form 8283 Noncash Charitable Contributions to your return or the deduction is not allowed. In general, you are required to obtain a qualified appraisal for donated property with a value of more than $5,000 and to attach an appraisal summary to the tax return.
Remember that charitable contributions also include out-of-pocket costs incurred while doing volunteer work for a charity. The current mileage rate for using your car for charitable purposes is 14 cents per mile. Other expenses, such as the cost of a required uniform, are also deductible.
Again, if the value of out-of-pocket costs are over $250, you must have written acknowledgment from the charitable organization.
To be deductible, any donation must be given to a qualified charitable organization. Donations to political or lobbying organizations do not qualify for deduction.
Next week, we will look at the rules and benefits of contributing appreciated stock to a charity.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.