Itemized Deduction Requirements for Gifts Over $250
The U.S. tax code offers an incentive for you to donate to your favorite non-profit organization: it allows you to claim your in-kind or cash gift as a taxable-income deduction so long as you also itemize your other deductible expenses on IRS Form 1040, Schedule A. Just keep in mind that if the value of your donation exceeds $250, you are required to meet additional requirements to qualify for the tax break.
Your gift is deductible if it benefits organizations qualified under the tax code. Those include, but are not limited to, non-profit groups such as churches, government agencies, charities, schools, scientific and literary companies, and organizations that work to prevent cruelty to animals and children. Ask the group you want to benefit whether the gifts you make to them are tax-deductible. The IRS also offers a search tool for you to determine whether a given organization is qualified. Available on its website, the tool is called "Exempt Organizations Select Check." You may not claim an income deduction for making gifts to individuals.
If you receive a perk that has monetary value in exchange for a more valuable donation, you may only claim on Schedule A the portion of your gift that exceeds the value of the freebie you got. If you give $300 to your local public radio station, for example, and receive a music CD valued at $15, you may claim a $285 deduction.
To back up your deduction in case of an audit, keep a receipt from the organization that received your cash donation to prove you made the gift. If you give an in-kind contribution, the IRS also requires that you ask for a statement from the recipient that describes the item donated. Whether you give money or property, the agency that receives it must declare on the receipt any perks you get for it. In the case of a monetary contribution, you may also use bank records to prove your donation.
In addition to listing your gift of over $250 on IRS Form 1040, Schedule A, you also have to complete and submit with your tax return IRS Form 8283 if you make an in-kind donation that exceeds $500. The form’s section A is for property you donate that is appraised at $5,000 or less. Section B is reserved for non-cash contributions worth more than $5,000 and it requires an appraiser’s signature. A representative of the organization receiving your gift also has to sign Form 8283 to acknowledge the date it received your donation.
Emma Watkins writes on finance, fitness and gardening. Her articles and essays have appeared in "Writer's Digest," "The Writer," "From House to Home," "Big Apple Parent" and other online and print venues. Watkins holds a Master of Arts in psychology.