IRS Tips for Year-End Charitable Contributions

In a recent IRS news release, the IRS pointed out several important items individuals and businesses should keep in mind when making their year-end donations:

1)     Provision for charitable contributions for certain IRA owners will expire at the end of 2013. An IRA owner, age 70 ½ or over, can directly transfer tax-free up to $100,000 per year to an eligible organization. Funds must be contributed directly by the IRA trustee to the eligible charity.

2)     Clothing and household goods must be in good used condition or better. Donors must receive a written acknowledgement from the charity for all donations worth $250 or more. The acknowledgement should contain the name of the organization, description of the non-cash contribution, statement that no goods or services were provided in return for the contribution (if this was the case), or a statement estimating the value of goods or services provided in return for the contribution.

3)     Cash donations, regardless of amount, must be substantiated with a cancelled check, bank or credit card statement, pay stub for payroll deductions, or written acknowledgement from the charity. These documents must show the name of the charity, date, and amount paid. In addition, any cash donation of $250 or more must have a written acknowledgement from the charity. The acknowledgement must contain the same items as noted in 2) above.

4)     In order to count the contribution for 2013, it must be charged to a credit card or the check mailed prior to January 1, 2014. The contribution must be made to a qualified organization. Individuals and businesses can check whether an organization is a qualified organization by going to http://apps.irs.gov/app/eos/

5)     For car, boat or airplane contributions over $500, the deduction is usually limited to the gross proceeds from its sale. The charity must provide Form 1098-C to the donor for attachment to the donor’s tax return.

6)     If a donor’s total noncash contributions exceed $500, the donor must attach a completed Form 8283 to the donor’s tax return.

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