The federal government encourages charitable giving by allowing you to deduct gifts made to your church and other qualified charities on your income tax return if you itemize. However, you must follow the IRS’s reporting rules to assure your charitable deduction.
If you make gifts of stock, bonds, mutual fund shares, life insurance or real estate with a value of more than $500, you must file Form 8283 (Noncash Charitable Contributions).
If the value of your noncash gift is more than $5,000, you must have what you give appraised. The appraisal cannot be dated more than 60 days prior to the date you complete your gift and must be prepared by a “qualified” appraiser (someone who holds themselves out to the public as an appraiser and who has state credentials showing he or she is qualified to do the appraisal). The appraiser may not be related to you, work for you or the charity on a regular basis, or be a party to the transaction by which you acquired the property. The appraiser’s fee cannot be based on a percentage of the property’s value.
You do not have to have an appraisal for gifts of publicly-traded stocks, bonds or mutual fund shares, even if their total value exceeds $5,000.
To deduct any single gift (cash or noncash) of $250 or more, you must have a written receipt from the charity describing (but not valuing) the gift by the time you file your return. If the charity gave you any thing or service in exchange for your gift, the receipt must describe them and give you a good faith estimate of their value. If no goods or services were provided, the receipt must say that. If the only thing you received for your gift of $250 or more was an “intangible religious benefit” the receipt must say that.
Following the rules is key to assuring the deductibility of your charitable gifts!
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.