IRS tax deduction benefits FAQ
There is much discussion online and it gets a little confusing sometimes about making a tax deductible charitable donation to a qualified Organization. But it's really quite simple, and as such we at the Giving Center would like to make sure you are properly informed as many Organizations are not. There are a few important facts to cover that in our cumulative years we have found to be of particular interest to someone looking to maximize their charitable deduction or the value thereof. Also read: Charity Donation Benefits
1. First of all, the basics;
A CHARITY CANNOT "GIVE" YOU FAIR MARKET VALUE!
Fair Market Value is determined by liquidating your donated asset!
It's an after thing, not a before thing and you are not getting over on Uncle Sam by asking for it ahead of time. No estimate of value from the Charity, guarantee, etc. it just doesn't work that way. Just go ahead and say what you really want. Many Organizations have staff members who are more than qualified to tell you if the value you are looking for is reasonable or if you are just plain crazy. Fair Market Value is generally the price at which property would change hands between a willing buyer and a willing seller, with both parties having a reasonable understanding and grasp of all the relevant facts pertaining to the item in question. Any charity should qualify that statement by saying they will earnestly and vigorously maximize the financial benefit you receive from your donation and at the Giving Center and all of our affiliates that is exactly what we will do.
They, or in this case "We" the Charitable Organization Giving Center, can perform and will in such a manner as to financially maximize the benefit you receive from you charitable donation.
A Charity can't give you a value at all unless your donation sells, is gifted to another Charitable Organization or needy individual or the Charity in question determines that they will retain the item to utilize in the furtherance of their charitable purpose. The rules relating to how to determine value are discussed in Publication 561 Determining the Value of Donated Property.
We can certainly help you avoid many pitfalls and steer you clear of making a great deal of mistakes along the way as we should.
You can substantiate the value of a group of items or donations valued under $5000.00 by keeping good records, finding similar items for sale and printing out those sales as a comparison and even by seeking out an industry professional for an appraisal. Although not required it would certainly help.
A Charity should have no hand in the determination of value, PERIOD!
Unless they choose to improve the item(s) donated...
2. If in fact your goal is to obtain a legitimate tax deduction, then you must be giving to a qualified organization.
This can be a bit tricky. Even with a search of the I.R.S. Website certain types of Charitable Organizations need not file at all. They are "exempt by definition". "Form I1023 not necessary. The following types of Organizations may be considered tax exempt under section 501(c)(3) even if they do not file form 1023.
* Churches, including synagogues, temples and mosques.
* Integrated auxiliaries of churches and conventions or associations of churches.
* Any Organization that has gross receipts in each taxable year of normally not more than $5,000.
The I.R.S. Keeps no record of qualified faith based charitable Organizations so be advised, just because they are not listed it does not mean they are not a qualified Organization! Also, you absolutely cannot deduct any contributions made to specific individuals, political organizations and candidates. (See IRS Publication 526).
3. Perhaps the most basic of rules it is perhaps the most important.
In order to deduct a charitable contribution of any kind, you must file Form 1040 and itemize deductions on Schedule A. That's right! You must ITEMIZE!
4. No matter the type or the amount, to deduct a contribution of cash, check, or other monetary gift, you the Donor must maintain a clear bank record, or other records or a written communication from the Charitable organization containing the complete name of the organization, the exact and true date of the contribution and amount of the charitable contribution. For text pay message donations, a telephone bill will meet the record-keeping requirements if it shows the complete name of the receiving Charitable organization, the exact date of the contribution, and the exact amount given. Any written acknowledgment from the qualified Charitable organization must show exact Dollar amounts donated and/or a clear description of any property contributed, and whether the organization provided any goods or services in exchange for the donated item/s/cash. 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 non-cash charitable contributions for the year is over $500, you must complete and attach IRS Form 8283, Non-cash Charitable Contributions, to your return.
5. If you receive a financial benefit because of your charitable contribution such as any merchandise, tickets to any sort of event or activity or other donated items and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
6. What can you donate? Simply put, you can donate anything that has value.
Vehicles, boats, aircraft, gemstones, real estate, intellectual property, antiques, collectibles, RV / Campers, fractional interest in property, fine art, comic books and so on. Many items will require valuation or appraisal. Especially when valued over $5000.00. Some by qualified appraiser. (Click on the links to learn more.)