Even with the recent tax law changes, donations remain tax-deductible. There are a number of things to consider when writing off amounts on your tax returns.
Individuals may be subject to deductible limits in a tax year. Though nondeductible amounts may be carried forward, whether cash or noncash items donated.
In an era of technology when we are able to raise money via social media and give through a text or phone apps, taxpayers need to be aware that donations can only be made to eligible organizations.
Donations to INDIVIDUALS are NEVER DEDUCTIBLE, no matter the cause. Not even if they are Pastors/Clergy.
Remember, ‘value of your time or services’ contributed can not be used as a deduction.
Not every organization is considered an eligible organization for tax purposes.
Check out a celebrity who ran into a roadblock when donating to individuals for charitable purposes. Depending on the amount donated, there may be tax implications to the donor.
Maintain Proper Records:
Be sure to keep proper records. In every case, I always recommend (though it is not required) my clients make donations via a check or debit/credit where contributions can be traced.
To claim a deduction for cash contribution(s) of $250 or more, you must receive an acknowledgement for each contribution from the qualified organization.
For deduction of noncash contributions over $500, you must submit Form 8283, Noncash Contributions with your Form 1040, Schedule A to ensure certain information is reported.
To claim a deduction for noncash contributions, you must maintain records regardless of the amount.
In general, you should have written records that include: *date purchased *amount paid when purchased (also known as your cost basis) *detailed description of items (I’ve had cases where the IRS asked for pictures of items contributed) *value of property on date contributed and method used to determine value.
There are special rules depending on the value of the property donated and if it has been enhanced, was inherited, received as a gift, traded securities, vehicles and certain other items.
You can review Publications issued for Individuals: Publication 526: Charitable Contributions