Tax Deductions for Non-Cash Charitable Contributions

Tax law allows a donor to claim tax deductions for their contributions of cash to qualified charitable organizations. Taxpayers are also allowed to claim a tax deduction for their contributions of items other than cash. We have all heard the radio ads encouraging us to donate our used car to charity in exchange for a tax deduction. This type of contribution has a number of rules that must be followed in order to receive the expected tax benefit. The single most important rule for non-cash contributions is no different than the rule for a cash contribution. You must obtain a written receipt from the charity acknowledging your donation.

There are also other types of non-cash contributions that you may typically make. Spring cleaning and the purging of old clothes or household goods and donating them to organizations such as Goodwill is a normal routine for most of us. Identify by type and quantity the items that have been donated and keep this list with your current year tax records. Remember to obtain a receipt from the organization and also keep that with your tax records. This receipt will typically not include any details of the items donated so it is up to you to keep these records.

You are required to complete Form 8283 for any non-cash charitable contribution claimed in excess of $500. Donated property with a value claimed in excess of $5,000 requires an independent appraisal that must be attached to your tax return. The IRS and numerous court cases have successfully denied deductions over $5,000 that has not included the independent appraisal.

There are many organizations that claim to be a bona-fide charity. Religious organizations and governmental entities are, by their nature, a Qualified Charitable Organizations. All other entities must apply to IRS for such designation. You can visit this web site to determine an organization’s qualified status.

-Robert Jackovich, CPA

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