IRS Donation Guidelines
IRS Donation Guidelines: Know the Tax Exemption Rules Before Making Charitable Contributions
Donating or giving away your stuff that you no longer find useful will certainly bring joy to people who could benefit from it immensely—even save their lives. This is exemplified by indigent breast cancer patients receiving life-sustaining support from car donations given to Breast Cancer Car Donations.
As an added bonus to your generous charitable donation, you will have the chance to get a tax deduction. According to the Internal Revenue Service (IRS) donation guidelines, a taxpayer can deduct the fair market value of vehicles, clothing, furniture, household items, books, appliances, toys and other items given as donations to accredited nonprofit charitable organizations with tax-exempt status.
Fair market value is the price a buyer would willingly pay for an item. The condition of the item usually determines its value. A charity you have chosen cannot state the value of your item. What you can do is to turn to a local tax consultant who should know the market values in your area.
However, it does not mean that you would get a tax deduction every time you’re feeling generous and you donate something. There are important rules you have to follow to receive your deductions. Here are IRS donation guidelines that you can take note of before making that donation:
How to Claim Tax Deductions for Charitable Giving
You can claim your tax deductions for charitable giving by filling out IRS Schedule A of Form 1040 using lines 16-19. This portion consists of all items you are qualified to claim as tax deductions in your itemized federal income tax return.
Rules for Claiming Charitable Tax Deductions
IRS donation guidelines spell out the rules for claiming tax deductions for charitable giving:
1. Choose a qualified tax-exempt organization. There are numerous organizations that will tell you ahead of time if they have a 501(c)(3) tax-exempt status. However, there are some that are not required to get a 501(c)(3) status from the IRS. These include churches, temples, synagogues, mosques and other religious organizations. Just to be sure, ask for the organization’s status before making a donation.
2. Meet some of the record-keeping requirements. You have to be ready with such documents as canceled checks, acknowledgment letters from charity, and appraisals that determined the donated item’s value.
3. You are required to donate in cash or property. You cannot just make a promise, pledge or take note to donate. It cannot be deducted until you actually donate cash or a property.
Document Your Charitable Giving
Keeping a good record of your donations is always important. It is even more important when you are donating non-cash items.
The IRS donation guidelines require that your records must contain the name of the charitable organization, when you made the contribution, and the total amount or the value of the property you donated.
Charitable organizations usually hand out acknowledgment letters or receipts to donors. If you don’t have these letters or receipts from the charity organization, the IRS can dismiss your charitable donation claims if they are $250 or more. You will need a distinct acknowledgment for each one of your donations. Also, a single acknowledgment must list each and every donation in detail with the date on when you made it.
Limits on Your Charitable Tax Deductions
A lot of taxpayers are not aware that there are certain limits on tax deductions. If you are contributing more than 20 percent of your adjusted gross income (AGI), you need to focus on limits. AGI is an individual’s total gross income minus specific deductions. Here are some criteria you can follow:
- Deduct appreciated capital gains assets up to 20 percent AGI.
- Deduct non-cash assets worth up to 30 percent AGI.
- Deduct cash contributions assets up to 50 percent AGI.
- Make a list of all the items you have donated. You will need this information for the Form 8283.
- Take note of the condition of each of the items and write its value. The IRS donation guidelines will allow deductions for different types of items that are in good working condition or better.
- Food and groceries give you the chance to claim deductions. If you donate groceries to a charity, you can deduct the cost of it. Get a written acknowledgment of your donation and your receipt for the prices of the items just to be sure.
- Take pictures of your donations.
- Make sure to get a receipt to verify your made donation.
- If you are making a donation that is worth more than $5,000, you need to obtain a written appraisal.
Take note that some contributions are not qualified as tax deductions under the IRS donation guidelines. Examples of these are gifts made to:
- Political campaigns, parties, action committees or any politically related event
- Individual people
- Contributions to foreign governments, for-profit hospitals and schools, chambers of commerce, business associations and labor unions
If you have further questions and clarifications on IRS donation guidelines, contact us at Breast Cancer Car Donations or give us a call at 866-540-5069 and donate a car for the benefit of indigent breast cancer patients! We are here to answer any concerns!