Charitable contributions are deductible only if you itemize deductions on Form 1040, Schedule A.
To be deductible, charitable contributions must be made to qualified organizations. Payments to individuals are never deductible. See Publication 526, Charitable Contributions.
If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
Types of charitable contributions
For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the date of the contribution, and the amount of the contribution. In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. See Publication 561, Determining the Value of Donated Property.
For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
You must fill out Form 8283 (PDF), and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return.
For more information refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining the value of your noncash contributions, refer to Publication 561, Determining the Value of Donated Property.
Give until it hurts may no longer apply
Trusts and direct gifts are only one way of helping your favorite charities. Many other alternatives are available. Some allow you to maintain control of your asset and still avoid future tax problems that might have occurred without the charitable planning.
Charitable planning and analysis can be a very rewarding process for you and your favorite charity. Identifying potential current or future significant tax problems can help you, your heirs and your charities.
If you have significant qualified or non-qualified type assets like IRAs, SEPs, 401Ks or annuities, as well as capital gains in stocks or business interests you may be creating significant future tax problems for you and your heirs.
Discovering these problems today gives you the time to plan properly and perhaps avoid them entirely and significantly enhance the future for yourself, your heirs or your favorite charity.
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