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Charitable Contributions
Starting in 2007 charitable donations must have a bank record or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. While there has always been a requirement to maintain records to support contribution deductions this new provision is designed to provide greater certainty, both to taxpayers and the government, in determining what may be deducted as a charitable contribution.
A summary of the new provisions relating the deductibility of contributions is as follows:
There is no deduction for contributions made to specific individuals, political organizations or candidates. The value of your time or services and the cost of raffles, bingo or other games of chance are also not deductible.
Contributions must be made to qualified organizations to be deductible.
Contributions must be made during the tax year are deductible for the specific tax year.
Any payments or “contributions” for merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event have limited deduction value. The portion that is deductible is the amount that exceeds the fair market value of the benefit received.
Donations of stock or other property are valued at the fair market value of the property (certain rules apply which require further discussion that is somewhat more complex than can be discussed herein.
Clothing and household items donated must be in good used condition or better to be deductible.
Special rules apply to donation of vehicles (again further discussion is required).
A deduction for individual contributions of $250 or more can only be claimed if a written acknowledgment from the qualified organization is obtained.
When claiming a deduction of more than $500 for contributed property (non cash), IRS Form 8283, Noncash Charitable Contributions, must accompany the tax return.
When claiming a donation for an item or a group of similar items valued at more than $5,000 requires an appraisal by a qualified appraiser.
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