Tax Tips
Charitable Contributions
Reporting and Substantiation Rules
The federal government encourages your generosity by allowing you to deduct your gifts to charities if you itemize. However, you must follow the Internal Revenue Service's reporting and substantiation rules to assure your charitable deduction.
Cash and Non-Cash Gifts
Gifts of $75 or more
If you received or were entitled to a benefit, the charity must, in connection with the solicitation or receipt of the gift, provide a written statement:
 | Informing you of limitation on the deduction related to value of goods and services provided by the charity, |
| Providing you with a good faith estimate of the value of the goods or services. |
However, token benefits received may be disregarded if the charitable gift is made in a fundraising campaign. The IRS has ruled that a gift is fully deductible if the charity informs the donors how much of their payment is deductible and:
| The donor receives benefits having a fair market value of the lesser of $71 or 2% of the payment, or |
| The donor gives the charity at least $33.50 and receives a low cost or token item bearing the charity's logo. |
| Also, no reduction of the charitable deduction is necessary for unsolicited free items that cost less that $7.10 |
Gifts of $250 or more
You must have a written receipt from the charity which:
| Describes (but does not value) the gift |
| Describes and values any goods or services given in exchange for your gift and |
| States if no goods or services to you in consideration of your gift. |
The receipt is not required to contain your social security number. Generally, separate payments are considered separate contributions for purposes of the $250 or more threshold unless the payments are made on the same day. Also, you must have the receipt in hand before you file your tax return.
Non-Cash Gifts
If your non-cash gifts for the year exceed $500, you are required to include Form 8283 with your income tax return. Section A is used to report gifts valued at less than $5000. Section B, which includes a property appraisal, is required for gifts exceeding $5000 in value. Appraisal rules apply if you gave "similar items of property" with a total value exceeding $5000 -- even if you gave the items to different charities.
The IRS says that "similar items of property" are items of the same generic type, including stamps, coins, lithographs, paintings, books, non-publicly traded stock, land and buildings. For example, if you contribute six paintings valued at $1000 each to six different charities, the appraisal rules would apply.
An appraisal is not required for gifts of publicly traded stock even if the total value exceeds $5,000. Gifts of non-publicly traded stock do not require appraisals so long as the value is less than $10,000.
If an appraisal is required, the gift must be made within 60 days following the appraisal. The property can be appraised after the date of the gift. You must receive the appraisal prior to the due date of the return on which the deduction is first claimed.
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