Phoenix Taxes | Charity Donations
When you donate money to a charity that will help the lives of those in need, that donation may help you when it comes to your tax return. You might be able to claim the contribution as a deductible charitable contribution that may lower your income tax. Here are a few things to know about deducting your gifts to charity.
- You must make your donations to qualified charities if you want to use the donation as a deduction. You cannot deduct gifts to individuals, political organizations or political candidates.
- To deduct the contribution, you must use form schedule A to itemize your deductions with your federal tax return.
- If you receive something in return for your donation, your donation will be limited. You are only allowed to deduct the amount of the donation that is in excess of the value of what you received in exchange for your donation.
- If you donate property instead of cash, the deduction amount is usually the item’s fair market value at the time of the donation. The fair market value is the amount you could have sold the item for on the open market.
- Clothing and household items must be donated in at least good condition in order to qualify for a deduction. Special rules apply for the donation of cars, boats and other types of property.
- Use form 8283 for all non-cash donations for amount over $500 for the year.
- For donations over $250 you must have a written statement from the charity. It must show the amount of the donation and a description any property given. It must also state whether any goods or services were received in exchange for the donation.
- You must keep records to prove the amount you are claiming for the contributions. For more information on what records to keep, refer to Publication 526.
For more information, please contact us at Dusseau & Makris, PC, your Phoenix CPA firm.