By Michele Dotson
Cleaning out closets, weeding out unwanted Christmas decorations, and year-end home renovations can yield some great items to donate to one of the many local charitable institutions that will take them. For those tax payers who itemize their deductions, donations made prior to January 1, 2014 can be claimed as deductions on their 2013 taxes.
Also, any monetary contributions made to qualifying organizations can also be used as a deduction.
But just what is deductible and what is the process for claiming a charitable contribution deduction?
The IRS has recently posted the following reminders to its site, www.irs.gov in preparation for the 2013 tax season, which officially begins January 31, 2014.
Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2013 count for 2013. This is true even if the credit card bill isn’t paid until 2014. Also, checks count for 2013 as long as they are mailed in 2013.
Only donations to eligible organizations are tax-deductible. The IRS provides a searchable online database available on its website. This lists most organizations that are eligible 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 2013 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 car, 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.
Always keep good records and receipts.
More information on preparing taxes can be found at www.IRS.gov.
The IRS website also warns individuals to use caution in selecting a tax preparer to be certain they are properly licensed and are updated on the most recent tax changes.
The tax payer is ultimately responsible for any information that is submitted to the IRS.