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Non-Cash Charitable Contributions – What to Know

by | Nov 26, 2013 | Tax and Accounting Desk

As the end of the year quickly approaches, the holiday spirit glows a little brighter with each passing day. It causes us to consume ourselves with putting up lights and decorations, attending holiday parties, and enjoying all of the different holiday concoctions offered by Starbucks. But more importantly, the holiday spirit renews our sense of generosity and charity. Many charities, including Salvation Army and Heifer International, rely on our generous spirits during this time of year for much of their operating budgets and special programs that makes the lives of the under-served in our community a bit brighter. As you dig out the wrapping paper and sweaters from the deep recesses of your closet and decide what to give to Goodwill, you may want to consider the following important information to maximize your tax deductions. The IRS encourages your charity by allowing you to deduct charitable contributions on your individual tax return. However, there are important documentation rules taxpayers must follow in order to receive such benefits.

Substantiating cash contributions is quite simple and only requires bank records or a written receipt from the charitable organization for transactions exceeding $250.  On the other hand, rules surrounding property donations, or any other non-cash donations, become more complex as the value of the donation increases. Generally, for property contributions of $500 or less, the taxpayer must maintain a written receipt from the charitable organization detailing certain required information. If the total non-cash contributions exceed $500, but no more than $5,000, the taxpayer, in addition to maintaining the receipt mentioned above, must file IRS form 8283 (Non-cash Charitable Contributions) with their personal tax return. When a similar group of non-cash contributions (e.g. furniture, clothes, or electronics) exceeds $5,000, a written receipt from the charitable organization, form 8283, and a qualified appraisal must be completed in order to receive a tax deduction. Form 8283 must be signed by both the charitable organization and the qualified appraiser for property contributions exceeding $5,000. Generally, the receipt and the qualified appraisal do not need to be attached to the return but must be completed by the time the return is filed.

Please continue to support your local charities and if you are planning on making a substantial charitable contribution this holiday season, be sure to consult your PKF Texas tax advisor. Happy Holidays!

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