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Keeping the Right Records
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Basic Rule:
Before
you make a donation, call Ronald
J. Cappuccio, J.D.,
LL.M.(Tax)
at (856)
665-2121.
Generally, you can deduct the full
amount of cash contributions up to 50 percent of your
Adjusted Gross Income (AGI) determined on your US 1040 Income tax
Return. Most taxpayers do not have to worry about this limit.
The
government has established an onerous record-keeping burden to
discourage you from taking your rightful charitable deductions on your
tax returns.
Record
Keeping Rule: For
donations of $250 or more, you mustget a written receipt
from the charity before you file your tax return. The
charitable receipt must
include:
- the amount
of the donation
- a detailed description
of the property;and
- the
value of any benefit
received from the charity (meals,
gifts,etc.).
Further, Cash
donations must be substantiated by a cancelled check,
bank record, credit or debit card statement, or by a written statement
provided by the charity.
Gifts of
Property. There are even harsher rules for gifts
of
property and tangible items.In order for you to get a deduction, the
charity must actually use the item to
further its tax-exempt purpose. For example,
if you donate artwork to a charitable
organization, you get no deduction if the charity does not display or
use it. Further, there must be an expensive, independent
contemporaneous appraisal to demonstrate value if the deduction exceeds
$5,000.
Qualified
Appraiser. A qualified
appraiser must:
- Be professionally certified or
meet IRS education and experience requirements;
- Be
familiar with appraising the kind of item being donated;
- Regularly make appraisals for
a fee;
- Meet IRS Tax Regulation requirements.
In addition, the IRS forces the appraiser to declare that he or
she meets the requirements for being
“qualified.” Taxpayers
frequently must attach a
sukmmary summary to the tax return. The summary
should reflect
records that:
- Name the charitable recipient of
the contribution;
- Identify the date and location of
the contribution;
- Detail a description of the
property;
- Indicate its value; and
- State taxpayer's basis in
the property.
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Clothing
and Household Items. Deductions for contributions
of clothing
and household
items
are permitted only if they are in good used
condition or better. Household
items
include furniture, electronics, appliances and linens.There is an
exception allows for single items that are not in "good"
condition or better if they are appraised at more than $500.
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| If you have a question., call Ronald J. Cappuccio, J.D.,
LL.M.(Tax) at (856)
665-2121 |
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