If you are planning to reduce your taxable income by contributing to charitable organizations, here are some essential regulations laid down by IRS. You will need to follow to get the amount deducted.
1. Your contribution to individuals, political parties, and other unrecognized organizations wouldn’t be included as deductions. To qualify for such deductions, you need to donate the amount or items to recognized or qualified charity organizations.
2. The donated item should be measurable and must possess market value. You cannot deduct an amount based on services and time given to charitable organizations. Also, you cannot deduct the cost of games like bingo, raffles, etc.
3. Donation of assets like stock, property, or other valuable items is deducted up to the prevailing market rates of the assets. Donation of vehicles, however, has a different set of rules of application.
4. You cannot give away pieces of junk and seek deduction. The item you are about to donate and include as a deduction must be in good condition.
5. Irrespective of the amount of donation made by you, a written record is necessary to deduct it as a charitable donation. This written record like a report or something must possess name of the charitable organization, date of donation, and the value of the donation. If you choose to donate by text message, the following telephone bill will bear the name, amount and date, which would be necessary to count it as a charitable deduction.
6. If you donate a property or cash of value equal to or exceeding $250. You will need either a written communication by the organization, payroll deduction record, or a bank record bearing the date, amount of charity, and the name of the organization.
7. If the amount of charity given by you exceeds $500 of non-cash contribution. You will have to fill up and attach IRS form 8283 to your return. This form is for Non-Cash Charitable Contribution.
8. If the amount of charity given by you exceeds $5,000 of total contribution. You will have to also fill up and attach Section B of IRS form 8283 to your return. This form demands an appraisal by any eligible appraiser.
9. To deduct any amount as a charitable contribution, you will have to fill up itemize deductions on Schedule A of form 1040.
Make sure you follow these guidelines if you have made any charitable contributions this year.
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