IRS Offers Tips for Year-End Giving

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Individuals and businessesmaking contributions to charity should keep in mind some key tax provisionsthat have taken effect in recent years, especially those affecting donations ofclothing and household items and monetary donations.
Rules for Clothingand Household Items
To be deductible, clothingand household items donated to charity generally must be in good used conditionor better. A clothing or household item for which a taxpayer claims a deductionof over $500 does not have to meet this standard if the taxpayer includes aqualified appraisal of the item with the return. Household items includefurniture, furnishings, electronics, appliances and linens.
Guidelines forMonetary Donations
To deduct any charitabledonation of money, regardless of amount, a taxpayer must have a bank record ora written communication from the charity showing the name of the charity andthe date and amount of the contribution. Bank records include canceled checks,bank or credit union statements, and credit card statements. Bank or creditunion statements should show the name of the charity, the date, and the amountpaid. Credit card statements should show the name of the charity, the date, andthe transaction posting date.
Donations of money includethose made in cash or by check, electronic funds transfer, credit card andpayroll deduction. For payroll deductions, the taxpayer should retain a paystub, a Form W-2 wage statement or other document furnished by the employershowing the total amount withheld for charity, along with the pledge cardshowing the name of the charity.
These requirements for thededuction of monetary donations do not change the long-standing requirementthat a taxpayer obtain an acknowledgment from a charity for each deductible donation(either money or property) of $250 or more. However, one statement containingall of the required information may meet both requirements.
Reminders
To help taxpayers plan theirholiday-season and year-end giving, the IRS offers the following additionalreminders:

• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2012 count for 2012. This is true even if the credit card bill isn’t paid until 2013. Also, checks count for 2012 as long as they are mailed in 2012.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. Exempt Organization Select Check, a searchable online database available on IRS.gov, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2012 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
• The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
• And, as always it’s important to keep good records and receipts.