Did you make a donation to a charity this year? If so, you may be able to take a deduction for it on your 2010 tax return. Here are the top 10 things the IRS wants every taxpayer to know before deducting charitable donations.
- Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization and most will be able to tell you. You can also check IRS Publication 78, Cumulative List of Organizations, which lists most qualified organizations. IRS Publication 78 is available at IRS.gov. Shades of Grace is a 501c3, tax-exempt, qualified organization.
- Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
- You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
- If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
- Be sure to keep good records of any contribution you make, regardless of the amount. For any contribution made in cash, you must maintain a record of the contribution such as a bank record – including a cancelled check or a bank or credit card statement – a written record from the charity containing the date and amount of the contribution and the name of the organization, or a payroll deduction record.
- Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, your deduction would be $200. You can make your year end tax deductible donation here online before midnight December 31st.
- Include credit card charges and payments by check in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
- For any contribution of $250 or more, you must have written acknowledgment from the organization to substantiate your donation. This written proof must include the amount of cash and a description and good faith estimate of value of any property you contributed, and whether the organization provided any goods or services in exchange for the gift. We provide written acknowledgments for you.
- To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attached the form to your return.
- An appraisal generally must be obtained if you claim a deduction for a contribution of non-cash property worth more than $5,000. In that case, you must also fill out Section B of Form 8283 and attach the form to your return.
For more information see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at IRS.gov or by calling 800-TAX-FORM. [i]
If you haven’t made your year end contribution, I’d like to ask you to please consider Shades of Grace Ministries.
With the New Year just around the corner and so many people in need of a fresh touch from God, your gift will help us start the year off right – ready to help them!
We want to reach people in the midst of their tests and trials – and point them to Christ. We want them to truly experience the life-giving power of God’s Word.
With your year-end gift of $20, $15, $30 or more, we will reach thousands more lives with the comfort of God’s Word in 2011…touching people in desperate need of hope and encouragement.
Day in and day out, the faithful partnership of friends like you bring the comfort of Christ to people enduring indescribable affliction. Countless lives are transformed from the inside-out, thanks to God’s love and grace.
I pray God’s blessing on you for all you’ve done with Shades of Grace to touch lives and transform hearts for Christ! May God fulfill His promise in your life: “A generous man will prosper; he who refreshes others will himself be refreshed” (Proverbs 11:25).
P.S. And just as a reminder, if your check is dated and postmarked by December 31, it is eligible for a 2010 tax deduction. Online donations can be made up until midnight on December 31st.
[i] Internal Revenue Service. (August 23, 2010). Ten Tips for Taxpayers Making Charitable Donations: Summertime Tax Tip 2010-21, August 23, 2010. http://www.irs.gov/newsroom/article/0,,id=172936,00.html