Taxpayers who regularly make donations to charity, or plan to make a charitable donation this year, may be able to take a deduction on their 2012 tax return. Here are nine tax tips from Daszkal Bolton LLP and the IRS:
(1) The organization must qualify. A list of organizations eligible to receive tax-deductible charitable contributions is online at http://www.irs.gov/charities/ under the “Search for Charities” tab.
(2) Taxpayers must itemize. Charitable contributions are deductible only if the taxpayer itemizes deductions on their 1040.
(3) Taxpayers generally can deduct cash contributions and the fair market value of most property that is donated to a qualified organization. Special rules may apply to clothing or household items, cars and boats.
(4) If the contribution entitles the taxpayer to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – the taxpayer can deduct only the amount that exceeds the fair market value of the benefit received.
(5) Good records must be kept of any contribution the taxpayer makes, regardless of the amount. For any cash contribution, the taxpayer must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
(6) As regards pledges and payments, only contributions actually made during the tax year are deductible. For example, if the taxpayer pledges $500 in September but pays the charity only $200 by Dec. 31, the taxpayer is allowed a $200 deduction in the current tax year.
(7) For donations made near the end of the year, credit card charges and payments by check are deductible in the year the taxpayer gives them to the charity, even though the credit card bill may not be paid, nor the bank account debited, until the next year.
(8) For large donations (any contribution of $250 or more), a taxpayer must receive a written acknowledgment from the charitable organization. The acknowledgment must include the amount of cash and state whether the organization provided any goods or services in exchange for the gift. If the taxpayer donates property, the acknowledgment must include a description of the items and a good faith estimate of its value. For items valued at $500 or more the taxpayer must complete a Form 8283, Noncash Charitable Contributions, and attach the form to the tax return. If the taxpayer claims a deduction for a contribution of noncash property worth more than $5,000, generally an appraisal must be obtained, and Section B of Form 8283 must be completed and filed with the return.
(9) Approximately 275,000 organizations automatically lost their tax-exempt status last year because they did not file required annual reports for three consecutive years, as required by law. Donations made prior to an organization’s automatic revocation remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions.
Consider Abi’s Place: If you are thinking of making a charitable gift this holiday season, we would ask that you please consider non-profit client Abi’s Placlientuploads/Abi_s-Place-xs bizA.JPGce. It is a 501(c)3 school serving children from 3-16 years old suffering from mental and physical disabilities.
Abi’s Place mission is to provide a safe, stimulating learning environment to medically-fragile children with moderate to severe developmental issues. Teachers, therapists, and parents all collaborate to develop a personalized education plan to accommodate each child’s documented needs in language, motor skills, socialization, and self help skills. Abi’s Place utilizes research-based instructional strategies, proper equipment, and assistive technology. Abi’s Place prides itself on fostering unique social interactions in an environment that allows children with special needs to thrive.
Abi’s Place is located in Coral Springs, Florida at 1710 University Drive. For more information, please contact Danielle Zimmerman, Founder, at 954-415-6329, or visit the website: www.abisplace.com. Please consider making a donation online at http://www.abisplace.com/DonationForm3.html.
Contact Us: If you are interested in making a charitable contribution for the holidays you still have time this year! We would like to help you ensure its deductibility. Please contact Sandy Smith, CPA, Tax Services Principal in our Ft. Lauderdale office at 561-367-1040, or email Sandy at [email protected] for questions or issues concerning charitable gifts.