The primary authoritative support concerning the valuation and reporting and recordkeeping of charitable donations is addressed in the Internal Revenue Service -- Publications 526 and 561.
Publication 561 focuses on the topic of “Determining The Value Of Donated Property.” Publication 526 addresses basically all other relevant topics of concern regarding Charitable Donations. This article focuses primarily on Charitable Contribution issues other than valuation, such as reporting to the IRS.
Cash Contributions (IRS Topic 506)
For a contribution of cash, check or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
Noncash Charitable Contributions (IRS Topic 506)
You must fill out Form 8283 (PDF), Noncash Charitable Contributions, and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return. Special rules apply to donations of certain types of property such as automobiles, inventory and investments that have appreciated in value. For more information, refer to Publication 526, Charitable Contributions. For information on determining the value of your noncash contributions, refer to Publication 561, Determining the Value of Donated Property.
As this CPA Gardens article notes, personal goods given to charity must typically be in good repair or better to qualify as a tax deduction. Any home good or clothing that a tax filer takes as a deduction and exceeds $500 is not required to meet this standard when the tax filer attaches a qualified appraisal of the item with the tax return. Special rules apply to vehicle donations. Unique reporting guidelines usually are applicable to auto contributions, and taxpayers who intend to claim said contributions are required to adhere any mandatory records to their tax return. The deduction for an automobile, sea-craft or airplane given to qualified charities are typically limited to the gross proceeds from its sale. This law is applicable if the total claimed value is greater than $500. Form 1098-C or a similar statement, has to be given to the contributor by the charity and adhered to the contributor's tax return.
The IRS has published the following tips to help ensure your contributions are deductible (IRS Tax Tip 2011-57):
- To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
- Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the recordkeeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
- To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
- Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, refer to Form 8283, as well as Publication 526, Charitable Contributions.