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Know the rules for charitable deductions
If you make a charitable contribution to a qualified nonprofit, you may be able to deduct the contribution from your taxable income. To do this, you need to itemize the deduction on IRS Form 1040, Schedule A.
Here’s a quick overview of the rules for documenting charitable contributions. Without proper documentation, your charitable deduction may be disallowed. Please note that TIAA does not provide tax advice. Please consult your tax advisor.
For any contribution of cash, a check or other monetary gift, keep a bank record (such as a cancelled check) or written communication from the charity (such as a receipt or letter) showing the charity’s name and the date and amount of the contribution.
For a single contribution of $250 or more, you must also obtain and keep a contemporaneous written acknowledgment of the contribution from the recipient. “Contemporaneous” in this case means the acknowledgment must generally be obtained by you no later than the date you file a return for the year you make the contribution. The acknowledgment must state whether you received any goods or services, such as admission to an event, in exchange for your gift, with a description of the goods or services and an estimate of their value.
Noncash contributions include donations of clothing, books, household goods or other property.
Property valued at less than $250. Keep a receipt showing:
- The recipient organization’s name
- The date and location of the contribution
- A description of the property in enough detail to identify the item or items
Property valued at $250 to $499. For a single contribution worth $250 or more, in addition to meeting the requirement for contributions of property valued at less than $250, obtain and keep a contemporaneous written acknowledgment of the contributions from the recipient. The acknowledgment must state whether you received any goods or services in exchange for your gift, with a description of the goods or services and an estimate of their value.
Property valued at $500 to $5,000. In addition to the rules for contributions of property worth less than $500, you must maintain the following written records:
- The manner and approximate date you acquired the property
- The approximate date of completion of property created or produced by you, such as artwork
- The adjusted value of the property other than publicly-traded securities
- A record of filing Internal Revenue Form 8283, Noncash Charitable Contributions, with your tax return
Property valued at more than $5,000. All noncash property contributions in a tax year are combined to determine if their total value exceeds $5,000, even if the contributions were made to multiple charities.
In addition to complying with the rules for noncash property contributions worth less than $5,000, you must get a qualified appraisal for all noncash property you contributed during the tax year. Complete an appraisal summary, consisting of information in Section B of IRS Form 8283, and have a qualified appraiser sign the form.
Consider consulting your tax advisor
Your professional tax advisor can offer guidance on giving to charities and deducting your gifts. He or she can also tell you about donor-advised funds, which let you dedicate specific assets to charitable purposes and earn an immediate tax deduction. Contact your advisor to learn more about donor-advised funds and other charitable giving strategies.