This is the fourth in a series of
reminders to help taxpayers prepare for the upcoming tax filing season.
IR-2016-154, Nov. 28, 2016
WASHINGTON
– As tax filing season approaches, the Internal
Revenue Service reminds taxpayers who give money or goods to a charity
by Dec. 31, 2016, that they may be able to claim a deduction on their 2016
federal income tax return and reduce their taxes.
Only donations to eligible organizations are tax-deductible. IRS Select Check on IRS.gov is a searchable
online tool that lists most eligible charitable organizations. Churches,
synagogues, temples, mosques and government agencies are eligible to receive
deductible donations even if they are not listed in this database.
Claiming Charitable Donations
Only taxpayers who itemize using Form 1040 Schedule A can claim deductions for
charitable contributions. Charitable deductions are not available to
individuals who choose the standard deduction or file Form 1040A or 1040EZ.
Most tax software will alert taxpayers about the tax savings available if their
itemized deductions, such as mortgage interest, charitable contributions, state
and local taxes, exceed the standard deduction.
Monetary Donations
A bank record or a written statement from the charity is needed to
prove the amount of any donation of money. Bank records include canceled
checks, and bank, credit union and credit card statements. Donations of money
include by check, electronic funds transfer, credit card and payroll deduction.
For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage
statement or other document furnished by the employer showing the total amount
withheld for charity, along with the pledge card showing the name of the
charity.
Donating Property
For donations of clothing and other household items the deduction
amount is normally limited to the item’s fair market value. Household items
include furniture, furnishings, electronics, appliances and linens. Clothing
and household items must be in good or better condition to be tax-deductible. A
clothing or household item for which a taxpayer claims a deduction of over $500
does not have to meet this standard if the taxpayer includes a qualified
appraisal of the item with the return.
Donors must get a written acknowledgement from the charity for all
gifts worth $250 or more. It must include, among other things, a description of
the items contributed. Special rules apply to cars, boats and other types of
property donations.
Benefit in Return
Donors who get something in return for their donation may have to
reduce their deduction. Examples of benefits include merchandise, meals,
tickets to an event or other goods and services.
Older IRA Owners Have a Different Way to Give
IRA owners, age 70½ or older, can transfer up to $100,000 per year
to an eligible charity tax-free. Funds must be transferred directly by the IRA
trustee to the eligible charity. For details, see Publication 590-B.
Good Records
The type of records a taxpayer needs to keep depends on the amount
and type of the donation. An additional reporting form is required for many
property donations and an appraisal is often required for larger donations of
property. Visit IRS.gov and check out these useful resources:
No comments:
Post a Comment