This article summarizes some tax tips for making certain year-end gifts to charity.
Only contributions to eligible charities are tax-deductible. There is a tool called Select Check, available on the IRS website, that can be used to research a charity's eligibility status. Note that religious organizations, such as churches, synagogues and mosques, as well as government agencies are eligible to receive tax-deductible donations even if they are not listed on the Select Check website.
Gifts are deductible in the year in which they are completed. This means checks dated 2015 will count towards 2015 if they are mailed in 2015. Contributions made by credit card, even if not billed until 2016, are eligible for 2015 status as long as they are charged to the credit account in 2015.
To be eligible for tax-deductible status, contributions to charity must be itemized on Form 1040 Schedule A. This means an individual who takes the standard deduction rather than itemized deductions may not claim a deduction based on charitable contributions.
For all charitable donations made, a record of the donation should be obtained and saved. The record or receipt should contain the charity's name, the date of the donation or contribution and a description of the items of property donated. If a receipt is not possible, because the donation was made to an unstaffed drop-off location, for example, create and keep a written record of the donation to that effect and include the fair market valuation of the donated property and the method by which that valuation was calculated.
With respect to donations of cars, trucks, boats or airplanes, the deduction is typically limited to the gross proceeds from the sale of the vehicle, boat or plane, provided the claimed value is more than $500. In such cases, Form 1098-C or a similar statement must be obtained from the organization to which the car, boat or airplane was donated and attached to the donor's tax return.
If the total of all noncash donations exceeds $500 in a single calendar year, Form 8283 must be completed and submitted with the donor's tax return.
Speak to a tax attorney
The tax law attorneys at Insight Law advise and represent clients in communities throughout King County, Pierce County and Snohomish County, Washington. Call the firm today at 206-922-8078 to schedule an initial consultation with an experienced tax lawyer. The firm can also be contacted or contacted by e-mail.