If you itemize filing a Schedule A, you can deduct charitable contributions. In 2020 individuals who do not itemize can deduct up to $300 from gross income for their qualified cash charitable contributions to public charities, private operating foundations and federal, state and local government. Regardless of the amount, you must maintain a record of the contribution: cancel check, written statement from the qualified organization that includes the date and the amount of your contribution. You cannot have received any services or benefits from your contribution. If you receive a gift because you gave a cash contribution, you will need to deduct the value of that gift from your contribution. Gifts to individuals are not deductible. Only qualified organizations are eligible to receive tax-deductible contributions. Here is how to find out if an organization is a qualified charitable organization.
In addition to your cash contributions, you can donate items. Generally, you can deduct the fair market value of any property you donate to a qualified organization. If you donate clothing, appliances or household items you will need to identify the value of the item. The thrift store value are used for these items. 2020 value of non cash contributions
Example: Giving the Fat Tax Cat a bigger bed so she is comfortable, is not deductible. Giving old towels and linens to the SPCA for dogs and cats to sleep on, is deductible as a non cash donation if you itemize.
Remember to keep track of your donated items. There are apps for your phone or a spreadsheet listing the items you donated in addition to the receipt from the charitable organization.
Obtain and keep records of all donations. If you donate:
- over $250 in cash or property
- over $500 in non-cash contribution, you will need to fill out form 8283
- over $5,000 non-cash contribution, you must obtain a qualified appraisal of the item or group of items and fill out form 8283 section B
- over $500,000 of non-cash property you will fill out form 8283 section B and attach the qualified appraisal to the return.
- There are special rules for donations of automobiles, inventory and other real property values.
- You can donate appreciated Investments, stocks, ETF’s or digital currencies to charitable organizations and receive the fair market value of the appreciated asset as a charitable deduction and avoid paying capital gains tax.
If you have more questions, set up an appointment with Wally to discuss the tax implications of cash or noncash charitable contributions.
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