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tax deductible car donations about Guidelines Regarding Tax-Deductible Charitable Donations
One of the most common itemized deductions is donations to qualifying tax-exempt organizations. However, the rules pertaining to such deductions have been tightened in the recent past and the IRS is giving keen scrutiny to this section of tax returns. Therefore, you need to apply more caution the next time you are claiming deductions against a donation you make. Below is a guideline as to some of the important aspects of donations that you need to keep in mind:
Confirm Eligibility of Organizations
The first rule of donation is confirmation as to whether an organization is tax-exempt and certified to receive tax deductible donations. In June 2011, the IRS released a list of organizations that had lost their tax-exempt status. The organization had failed to file certain documentation as is expected by the law and have therefore, lost their tax-exempt status. The IRS has, however, put in place an arrangement for any organization that has lost its status to regain it. However, for the donors to these charities, it is his or her responsibility to check with this IRS's list to confirm that an organization to which they are donating still has its tax-exempt status. The IRS has also announced that it will periodically update this list on their IRS website and that it would be wise to check the list each time before making a donation.
Non-cash Donations
A deductible charitable donation can either be in monetary terms or in non-cash items. You can donate clothes, cars, property, toys, bedding, or any other items. However, there are certain rules that apply to a donation of these kinds. For a donated item with a value above $250.00 to be deductible, one must receive a record (document) from the charity organization, acknowledging receipt of the item with the description and value of goods indicated. This will be the support documentation for the donation made. For items that exceed a value of $500.00, one needs to file Form 8283, "Noncash Charitable Contributions Form" and attach it to one's tax returns. If you donate an item or similar items with a value of more than $5,000.00, you must fill out Section "B" of the Form 8283 with a valuation/appraisal performed by a qualified appraiser. The items being donated need to be in a good and usable state or even better. For property and car donations, there are other specific rules that apply and you will need to ensure that you adhere to these rules to have your donation qualify as a deductible.
Donations for a Benefit
For donations that provide you a benefit of monetary value, you must deduct this value of the benefit to the donation made before making a deduction. For example, if you pay for a charity opera or dinner ticket, you must deduct the regular price of the opera or dinner before making the donation deduction.
Donation Threshold
The maximum amount of donations that one can deduct is 50% of their taxable income. If a taxpayer donates more than 50% of their income, they are only allowed this maximum and they will have to shoulder the rest after taxes. Besides this maximum, high value donations that are not proportionate to ones income are also a tax red-flag and can easily get you singled out for an IRS audit.
Rob L Daniel and partners of Limon Whitaker & Morgan, for years have helped businesses and individuals Nationwide, with their delinquent IRS & State tax problems. The firm is based in Los Angeles, California USA. http://www.limonwhitaker.com / Tel:888.321.6188
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