Publication 526 offers information on charitable contributions, but at the end of the year when many donations are made, the IRS often offers reminders about key guidelines. IR-2009-114 offers a number of tips for taxpayers who want to be able to deduct year-end gifts. Here's the list:
1) Limited time offer (I hope) tax-free deduction for $100,000 contributions direct from IRAs for owners 70 1/2 and older
Clearly this is a benefit for the wealthy donors who already get most of the benefit of the charitable contribution deduction. Another of those Bush-era options (created in 2006) that should be allowed to bite the dust when it expires at end of this year.
2) Donations of household items and clothing "must be in good used condition" to be deductible
Hmmm. How many people attempt to get a deduction for junk contributed to Salvation Army??? And will whether or not there is this requirement??? Hey folks. Give that stuff away and don't try to claim a deduction. You probably don't deserve to get to call it charity if it is junk to you--i.e., stuff that you don't want anyway.
3) Monetary donations require a "bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution."
The release notes that contributions for credit card charges are dated from the "transaction posting date", while bank records include "canceled checks" or "bank or credit union statements". That seems to conflict with some authority that suggests that the mailing rule applies rather than the cancelation date for the check. The material in ""reminders" clarifies, helpfully, that charges to a card by year-end are ok, even if they aren't paid til 2010, and that checks mailed in 2009 are ok, so long as they are cleared shortly thereafter.
My own advice--be wary of mailed charge-card contributions to charities. They often take quite a while to process and may not be charged to your account by year-end even if you mailed a charge slip with your donation early in December.
4) Substantiation of gifts is stricter than it used to be
A taxpayer is also supposed to have an acknowledgment from the charity for donations of $250 or more.
If the amount of all noncash contributions is over $500, taxpayers have to complete Form 8283 with their tax return.
5) Donating a motor vehicle, boat, or airplane will permit a deduction limited to the gross proceeds from the charity's sale of the vehicle. See Form 1098-C, required to be provided by the charity to the donor and attached to the tax return.
Recent Comments