Your Tax Checklist for Charitable Contribution Deductions

If you want a deduction for charitable giving, there are some rules you have to follow.

Garza & Harris is here to lay some of them out for you:

  • You must itemize. There’s no above-the-line deduction for taxpayers who choose to claim a standard deduction.

  • The IRS has a list of recognized charities – donations have to be given to those in particular.

  • There are substantiation rules in place that you must follow – this may include getting written acknowledgments from a charity and qualified appraisals.

  • Cash donations are limited to 50% of AGI, while donations of appreciated property usually are limited to 30%. Though these AGI limits are waived for “qualified contributions” (including contributions for relief efforts for Hurricane Harvey in Houston and others made before January 1, 2018).

  • For 2017, the phase out of charitable deductions begins for joint filers when AGI exceeds $313,800; for heads of households, at $287,650; for single individuals, at $261,500; and for married persons filing separately, at $156,900.

  • If you’ve held onto a piece of property for a year or more and you’ve experienced appreciation in value, you can take a deduction for the property’s fair market value on the date of the contribution.

  • While donations of publicly traded stock don’t have to be appraised, donations of other property, like land or artwork, probably need to be appraised. For example, any personal property with a claimed value of $5,000 or more must include a qualified appraiser’s signature on IRS Form 8283, Charitable Contributions.

  • If you own an IRA and are at least 70½ years old, you can make a qualified charitable distribution of up to $100,000 annually from the IRA. The distribution is not taxed.

  • QCDs are restricted to regular IRAs. They cannot be made from IRA-type accounts, such as SEP IRAs or Simple IRAs.

  • High-income business owners can have their companies make donations for them. Donations by C corporations are limited to 10% of taxable income, while donations by pass-through entities are claimed by owners on their personal returns based on their share of the businesses’ donations.

  • Usually, an inventory donation is deductible to the extent of the lesser of the fair market value on the date of the contribution. If the cost of donated inventory is not included in opening inventory, then the inventory’s basis is zero, and no deduction can be claimed.

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