Charitable giving can be a great deduction on a taxpayer’s return that reduces the amount of taxable income if the taxpayer is itemizing deductions. Luckily, there are several resources available for taxpayers looking to get the most from their donations to charity.
For a donation to be deductible on a tax return, it needs to be to a qualified organization. This tool can be used by taxpayers to find out if the charity they want to donate to qualifies for a tax deduction.
Publication 526 explains how much of a deduction can be taken, what records need to be kept and how to report the donations on their tax return.
Generally, taxpayers can deduct the fair market value of the property they are donating. Publication 561 explains how to calculate what fair market value should be.
Form 8283 is used to report noncash contributions for any amounts over $500. This link displays the form itself for taxpayers to look over and provides a link to the instructions that detail the information needed to report a noncash contribution over $500.
Charitable contributions are part of a taxpayer’s itemized deductions which are reported on Schedule A. This link displays Schedule A as well as the instructions for the form which details how and where to report the taxpayer’s qualifying charitable contributions.
If a taxpayer is over the age of 70½, they can make a charitable distribution from their IRA directly to a qualifying charity. The maximum amount for this kind of donation is $100,000. The donation is reported to the taxpayer as a nontaxable distribution, and the distribution counts towards their required minimum distribution for the year.
For current information about charitable donations, read this article about the CARES act and charitable donations.
KC Kolb, CPA