If out of the kindness of your heart you gave money or goods to a charity in 2016, you may be able to claim a deduction on your tax return! Keep these facts in mind:
Fact 1: Qualified Charities
You would need to donate to a qualified charity. “Gifts” to individuals, political organizations, or candidates are not deductible.
Fact 2: Itemize Deductions
To deduct charitable contributions, taxpayers must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with a federal tax return.
Fact 3: Benefit in Return
If you get something in return for their donation, you may have to reduce your deduction. Taxpayers can only deduct the amount that exceeds the value of the benefit received. For example, these benefits could include merchandise, meals, tickets to events, etc.
Fact 4: Type of Donation
If you give property instead of cash, your deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price they would get if the property sold on the open market. If you donate used clothing and household items, those items typically must be in good condition – or better. Special rules apply to other types of property donations.
Fact 5: Noncash Charitable Contributions
File Form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year. Complete section-A for noncash property contributions worth $5,000 or less. Complete section-B for noncash property contributions more than $5,000 and include a qualified appraisal to the return. The type of records you must keep depends on the amount and type of your donation.
Fact 6: Donations of $250 or More
If you donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of what was given. It must also say whether you received any goods or services in exchange for the gift.
Now that’s a gift that just keeps on giving!