Charitable Donations - Tax-Free Distributions from IRAs for Charitable Purposes

Charitable Contributions

Liberty Tax Service reminds you that the IRS has imposed stricter standards for the condition of some items donated to charities. No deduction is allowed for clothing and household items unless the donated property is in “good used condition or better.” The rule does not apply to any contribution of a single item for which a deduction of more than $500 is claimed if the taxpayer includes a qualified appraisal with the return. Monetary charitable contribution deductions will be disallowed unless the donor maintains a record of the contribution with cancelled checks, receipts, and written documentation.

Vehicle Donation As A Charitable Contribution

Do you plan to donate your used car to a nonprofit organization? Liberty Tax Service reminds you that you may not be able to claim the “blue book value” of the car. The IRS has placed limitations on the amount that may be deducted for a vehicle donation. The amount that can be claimed will be based on how the charity or nonprofit organization actually uses the vehicle. If the organization sells the donated vehicle without using it in any significant way, the charitable deduction cannot exceed the gross proceeds of the sale. If the organization uses the vehicle, but does not sell it, the taxpayer must have documentation of the vehicle’s value, or fair market value. The receiving organization should issue Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes exceeding $500. One copy of this form should be kept with the taxpayer’s records and the other should be attached to the tax return.

Charitable Donations - Tax-Free Distributions from IRAs for Charitable Purposes

Taxpayers can exclude from income distributions from IRAs made directly to a charity through December 31, 2015. The maximum contribution limit for 2015 is $100,000.