Tag: charitable giving

Ten Tips To Deducting Charitable Gifts

Ten Tips To Deducting Charitable Gifts

The IRS has released ten tips to help you deduct charitable gifts this tax season. When completing your Schedule A for your federal tax refund, don’t forget to take your charitable contributions as they can add up to a good sized tax deduction. Here are the rules to make sure you get the deduction:

1. Contributions must be made to qualified organizations.

2. You cannot deduct time or services, only money and gifts can be deducted.

3. Any merchandise received in exchange for a gift must reduce the value of your gift for the tax deduction.

4. Fair market value must be used for stock and property donations.

5. Items must be in good condition or better to be allowed.

6. Save your bank records for any money donations you make and save the records with your tax return.

7. Also get a written acknowledgement from the organization when you make a donation greater than $250.

8. IRS Form 8283 must be used when your property contributions exceed $500 in value.

9. You must get an appraisal when donating property valued greater than $5,000.

10. If you donated to a Midwest disaster relief area you get special benefits which you can read about in Publication 4492-B.

The Smart Way to Give

If you are philanthropic by nature, and have a financially comfortable retirement, you may be wondering the best way to donate to your favorite charity. If you are at least 70-1/2 you have a special opportunity in 2008 and 2009. If you transfer your funds from an IRA directly to the charity, they will not be included in your taxable income, as they would if you took an IRA distribution and paid it over to the charity.

You may be wondering why this matters, as the charitable payment is tax-deductible. However, many deductions depend on your adjusted gross income (AGI), for instance medical expenses are only deductible to the extent that they exceed 7.5% of AGI, so if you can keep the money out of your income it will help your tax situation. If you need to make a required minimum distribution for 2008 from your IRA plan to avoid penalties, you have until April 1, 2009 to donate directly to charity, satisfy your minimum distribution, and avoid having the amount counted as income to you.