Notes from IHA
Here are some handy tips on charitable giving modified from a list from Martin Hood Friese and
Associates. Charitable deduction rules can be tricky and may require specific advice from tax planners.
A charitable organization should have its IRS determination letter available to let donors know it is qualified to receive tax-deductible donations. An IRS 501(c)(3) letter is not the same as a state sales tax exemption letter.
Know what is not deductible: artistic performance or professional service; and what is: out-of-pocket expenses, mileage, and parking fees while providing services to a charity.
Items of property for which the donor deducts more than $500 require a qualified appraisal and Form 8283. The charity should not be the source of the appraisal.
Deductions for motor vehicles, boats, or airplanes are generally limited to the amount a charity actually gets when selling the items. If the amount of the contribution is greater than $500, the charity must give the donor Form 1098-C.
Contributions made by check are considered delivered to the organization on the date they are mailed regardless of when the charity cashes the check. Contributions made by credit card are deductible in the year of the charge, not the year the credit card is paid.
Charitable contributions reduce the donor’s taxes only if the person itemizes deductions. Standard deduction taxpayers may not receive a tax deduction for contributions.
Donors need to keep records of contributions. Cash contributions of less than $250 need a copy of the canceled check showing the name of the charity and the date and amount of the contribution. Credit card statements should show the name of the charity, the date and amount of the transaction posting date. If the contribution is more than $250, it’s important to remember that the charity must furnish a written acknowledgement of each deductible donation (either money or property) to the donor.