February 4, 2023

Charitable Tax Tips

Posted by Diana Little
Beacon Financial
Leading Edge

First in a series of three – If you make a donation to a charity this year, you may be able to take a deduction for it on your 2011 tax return.  Here are three of the top nine things the IRS wants every taxpayer to know before deducting charitable donations.

1.        Make sure the organization qualifies. Charitable contributions must be made to qualified organizations to be deductible.  You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov. You cannot deduct contributions made to specific individuals, political organizations and candidates.

2.       You must itemize. Charitable contributions are deductible only if you itemize using Form 1040, schedule A.

3.       What you can deduct. You generally can deduct your cash contributions and fair market value of most property you donate to a qualified organization. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of the relevant facts. Special rules apply to several types of donated property, including clothing or household items, cars and boats. To be deductible, clothing and household items donated to a charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances and linens. Refer to IRS Publication 561, Determining the Value of Donated Property for more information and rules for donating vehicles and boats.

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