Without a doubt one of the best ways for us middle-class folks to reduce our income tax burden is to donate charitably with intent. Most of my clients find themselves pleasantly surprised at the tax benefits received when they go through the exercise of donating gently used household items to charity.
When making non-cash charitable contributions, most donors are aware of Form 8283. This form must be filed as a part of the taxpayer’s 1040 if the taxpayer made non-cash charitable contributions of $500 or more during the year. This form includes information about the recipient organization and a summary of the items that were contributed.
Form 8283 has sometimes been utilized by the taxpayer as acknowledgement from the recipient organization. However, this is not the intent of Form 8283 and the IRS does not consider a completed Form 8283 as proper acknowledgement.
Less well known is Form 8282, Donor Information Return. This return is completed by the recipient organization and sent to the IRS Service Center in Ogden, UT. In addition, a copy Read More
It seems that everyone has “stuff” around the house that they want to get rid of. One option is to back the truck up to your front door, dump it all in the truck and head for the landfill. And for some items, that is a good alternative, maybe the only one. But some of your things may have value. It’s still in good shape and someone could make good use of it.
A garage sale may be in order. This can put some cash in your pocket, but it can be a lot of work. You’ve got to display and price your wares which takes a good bit of time and thought. Then you have to sit out all day, answering questions, negotiating prices, and hopefully making sales. The good news is that this is probably not taxable income unless you sold an item for more than it cost. Not likely. You do need to be aware of any local restrictions or licensing of this type of activity. Read More
From time-to-time, nonprofit organizations may be donated a vehicle, boat, or airplane as a charitable contribution. The IRS realized that this was an area in which taxpayers were abusing the law, often taking a deduction far in excess of the actual value of the vehicle being donated. For example, in one instance a vehicle was ready for the junk pile but the donor gave it to a charitable organization. Based on the Kelley Blue Book Value it had a fair market value of $1,200, which the donor used as a charitable contribution deduction on his Form 1040. So several years ago, more restrictive rules were put in place in regard to the amount that may be deducted as a charitable contribution.
The long-standing rule for non-cash charitable contributions states that any such contribution valued in excess of $500 must be reported on Form 8283 and included Read More
The IRS often puts charitable deductions under the microscope. This area has been ripe for abuse in the past, but the rules for establishing and documenting gifts to charity were recently tightened. As the deadline for filing 2012 returns fast approaches, the IRS is reminding taxpayers and practitioners about these requirements by posting nine tips for securing charitable deductions.
1. To qualify for a deduction, a taxpayer must make the donation to a qualified charitable organization. You can’t deduct contributions you make to an individual, a political organization, or a political candidate.
2. Taxpayers must file Form 1040 and itemize deductions on Schedule A. If the total deduction for all non-cash contributions for the year is more than $500, taxpayers must also file Form 8283, Non-cash Charitable Contributions, with their tax return.
3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits that may be received in return for a contribution include merchandise, tickets to an event, or other goods and services.
Generally, a taxpayer may deduct the fair market value of property donated to charity if he or she has held it longer Read More
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