If you are looking for a tax deduction, giving to charity can be a “win-win” situation.
It’s good for them and good for you. Here are eight things you should know about deducting your contributions to charity:
- You must donate to a qualified charity if you want to deduct the contribution. You can’t deduct contributions to individuals, political organizations, or candidates.
- To deduct your contributions, you must file Form 1040 and itemize deductions.
- If you get a benefit in return for your contribution, your deduction is limited. You can only deduct the amount of your contribution that’s more than the value of what you received in return. Examples of such benefits include merchandise, meals, tickets to an event, or other goods and services.
- If you give property instead of cash, the deduction is usually that item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market.
- Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.
- You must file Form 8283, “Noncash Charitable Contributions,” if your deduction for all noncash contributions is more than $500 for the year.
- You must keep records to prove the amount of the contributions you make during the year. The kind of records you must keep depends on the amount and type of your donation. For example, you must have a written record of any cash you donate, regardless of the amount, to claim a deduction. It can be a canceled check, a letter from the organization, or a bank or payroll statement. It should include the name of the charity, the date, and the amount donated. A cell phone bill meets this requirement for text donations if it shows this same information.
- To claim a deduction for donated cash or property of $250 or more, you must have a written statement from the organization. It must show the amount of the donation and a description of any property given. It must also say whether the organization provided any goods or services in exchange for the contribution.
Want more information or assistance? Contact Jim Komos and the tax experts at Ciuni & Panichi, Inc. at 216.831.7171 or email to jkomos@cp-advisors.com.
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