Charitable gifts pay off for all
Now the IRS can deny deductions for items that are deemed of "minimal
monetary value." When your total amount of donated articles (or as the IRS
calls them, noncash gifts) exceeds $500, you have to file with your tax return Form 8283, Noncash Charitable Contributions, detailing your generosity. Taxpayers
still can inflate the used property's value on the form, but with the new guidelines
and charitable groups' reminders of it, lawmakers are hoping that individuals
will follow the new rules. From the enforcement side, don't be surprised to find
tax examiners taking closer looks at this form and asking more follow-up questions
rest of the rules remain
From a tax standpoint, the key contribution
consideration is just how much of a break your donations will produce.
depends on how you file your taxes. Charitable contributions only help you at
tax-filing time if you itemize deductions. That means you have to keep track of
what you give and file the long Form 1040 and Schedule A.
If you opt instead to take the
standard deduction when you file your return
-- the choice made by most taxpayers -- your
donations will still help the organizations
you give to, but they won't help cut your
tax bill. You can't add your donation totals
to your standard deduction to increase that
how do you know whether you should itemize or claim the standard deduction? Start
by finding out which standard deduction amount applies to you.
| For 2008 returns,
the standard deduction amounts are:
If you have enough deductions
-- for example, your donations, plus mortgage
interest, plus real estate taxes -- to exceed
the standard amount, it generally makes good
tax sense to itemize.
your tax benefit
OK, you've determined that itemizing is the way
to go. Now it's time to tally your big-heartedness.
thing about charitable contributions is that, unlike medical or miscellaneous
deductions, there is no threshold amount to meet. You can give as little as $5
and still add it to the rest of your itemized deductions.
also not limited to monetary donations. You can give merchandise, appreciated
assets, count the miles you drive for a worthy cause, even deduct part of the
price of a ticket you purchased to attend a charity event.
there are still a few IRS rules you must follow to make sure your contributions
pay off at tax-filing time.
To be deductible, contributions
must be made to qualified organizations. This
is especially important when disasters prompt
giving; too often, con artists use such tragedies
to take your money and give nothing to those
suffering. Organizations can tell you if they
are qualified and if donations to them are
deductible. You can also read the charity's
literature to ensure that it is fully recognized
by the IRS.
For complete peace of mind, check out the agency's online
list (Publication 78) of exempt organizations or call the IRS
toll-free at 877-829-5500 and ask about the group's tax status.