Charitable Contributions

One area of deductions that is fairly common is that of charitable contributions. Our office quite often will assist our valued clients in properly deducting the contributions made to charitable organizations.

Below, I have outlined some of the highlights of the code involving charitable contributions.

Charitable contributions are deductible only if you itemize deductions on Form 1040, Schedule A. You cannot take the deduction if you use the standard deduction.

To be deductible, charitable contributions must be made to qualified organizations.

The following list gives some examples of qualified organizations.

• Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.

• Most nonprofit charitable organizations such as the Red Cross and the United Way.

• Most nonprofit educational organizations, including the Boy (and Girl) Scouts of America, colleges, museums, and daycare centers if substantially all the childcare provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct.

• Nonprofit hospitals and medical research organizations.

• Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs.

• Nonprofit volunteer fire companies.

• Public parks and recreation facilities.

• Civil defense organizations.

If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received. For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution either a bank record or a written communication from the qualified organization containing the date and amount of the contribution and the name of the organization. You generally can deduct the fair market value of any property you donate, as well as your cash contributions, to qualified organizations.

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, and whether the organization provided any goods or services in exchange for the gift. 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.

You must fill out Form 8283, and attach it to your return, if your total deduction for all noncash contributions 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 $5,000,000, you will also need to attach the qualified appraisal to your return.

If you have any questions regarding charitable contributions, please do not hesitate to call our office at (615) 746-4632.