Deducting Charitable Contributions:
Donations made to qualified organizations may help reduce
the amount of tax you pay.
The IRS has eight essential tips to help ensure your
contributions pay off on your tax return.
If your goal is
a legitimate tax deduction, then you must be giving to a
qualified organization. Also, you cannot deduct contributions
made to specific individuals, political organizations or
candidates. See IRS Publication 526, Charitable Contributions,
for rules on what constitutes a qualified organization.
To deduct a
charitable contribution, you must file Form 1040 and itemize
deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must
complete and attach IRS Form 8283, Noncash Charitable
Contributions, to your return.
3. If you receive
a benefit because of your contribution such as merchandise,
tickets to a ball game or other goods and services, then you
can deduct only the amount that exceeds the fair market value
of the benefit received.
4. Donations of
stock or other non-cash property are usually valued at the
fair market value of the property. Clothing and household
items must generally be in good used condition or better to be
deductible. Special rules apply to vehicle donations.
value is generally the price at which property would change
hands between a willing buyer and a willing seller, neither
having to buy or sell, and both having reasonable knowledge of
all the relevant facts.
the amount, to deduct a contribution of cash, check, or other
monetary gift, you must maintain a bank record, payroll
deduction records or a written communication from the
organization containing the name of the organization and the
date and amount of the contribution. For text message
donations, a telephone bill meets the record-keeping
requirement if it shows the name of the receiving
organization, the date of the contribution and the amount
To claim a
deduction for contributions of cash or property equaling $250
or more, you must have a bank record, payroll deduction
records or a written acknowledgment from the qualified
organization showing the amount of the cash, a description of
any property contributed, and whether the organization
provided any goods or services in exchange for the gift. One
document may satisfy both the written communication
requirement for monetary gifts and the written acknowledgement
requirement for all contributions of $250 or more.
donating an item or a group of similar items valued at more
than $5,000 must also complete Section B of Form 8283, which
generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions call my
office at 360-659-8502, or refer to Form 8283 and its
instructions, as well as Publication 526, Charitable
Contributions. For information on determining the value of
donations, refer to Publication 561, Determining the Value of
Donated Property. All are available at www.irs.gov or by
calling 800-TAX-FORM (800-829-3676). ( taken from IRS
Tax Tip 2012-57
Some employees may be able to deduct certain
work-related expenses. The following facts from the IRS
can help you determine which expenses are deductible as an
employee business expense. You must be itemizing deductions on
IRS Schedule A to qualify.
Expenses that qualify for an itemized deduction generally
- Business travel away from home
- Business use of your car
- Business meals and entertainment
- Use of your home
- Miscellaneous expenses
You must keep records to prove the business expenses you
deduct. For general information on recordkeeping, see IRS
Publication 552, Recordkeeping for Individuals available on
the IRS website at www.irs.gov, or by calling 1-800-TAX-FORM
If your employer reimburses you under an accountable plan, you
should not include the payments in your gross income, and you
may not deduct any of the reimbursed amounts.
An accountable plan must meet three requirements:
1. You must have paid or incurred expenses that are deductible
while performing services as an employee.
2. You must adequately account to your employer for these
expenses within a reasonable time period.
3. You must return any excess reimbursement or allowance
within a reasonable time period.
If the plan under which you are reimbursed by your employer is
non-accountable, the payments you receive should be included
in the wages shown on your Form W-2. You must report the
income and itemize your deductions to deduct these expenses.
Generally, you report unreimbursed expenses on IRS Form 2106
or IRS Form 2106-EZ and attach it to Form 1040. Deductible
expenses are then reported on IRS Schedule A, as a
miscellaneous itemized deduction subject to a rule that limits
your employee business expenses deduction to the amount that
exceeds 2 percent of your adjusted gross income.
For more information see IRS Publication 529, Miscellaneous
Deductions, which is available on the IRS website at
www.irs.gov, or by calling 1-800-TAX-FORM (800-829-3676).
( taken from IRS Tax
To read my other articles online go to
www.PettisRumseyCPA.com and click on the Newsletter section.
As always you can call our offices if you have any
questions about these or any other accounting related issues, at 360-659-8502.
Regards, David Rumsey, CPA