The IRS likes it when you give things away. They will give you a tax deduction for donating things that are worth money, and IRS Form 8283 is how you claim this deduction. It’s called Noncash Charitable Contribution. It’s for property you donate to charity and believe me you can’t ignore the rules on donations because the IRS has a tight system for checking up on charitable donations.
What are the Rules for Charitable Contributions?
“Noncash charitable donations” means anything but cash money. The word “property” means something different to the IRS than what it means to you and me in everyday life. To the IRS, and when we’re talking taxes, “property” means anything but cash. It can mean a painting, a piece of land, some stocks you own, or a copyright in your name. When you give any of this kind of thing away and it’s worth more than $500, it’s called a Noncash Charitable Contribution.
Now, it matters to whom you give the contribution. Donating a used sofa worth $600 to your niece does not count. That’s because your niece is not an official charity, recognized by the IRS. If you want your charitable contribution to be tax-deductible, you must donate to a tax-exempt organization that’s officially recognized by the IRS. They must apply for the status and once they’re accepted they must make public their business records so the public can check them out and make sure that’s where they really want their contributions to go.
You can look up the charitable organizations that have properly applied for tax-exempt status and can therefore accept your deductible donations…go to the GuideStar website at http://www.guidestar.org/rxg/give-to-charity/index.aspx. You can also review their IRS Form 990 submissions, which are informational tax returns if you want to check out their financial and business proceedings.
How Do I Fill out IRS Form 8283?
You’ll need to know a lot about the value and history of the item(s) you are donating, as well as information about the actual charity.
As for the donated property, you must fill in the following information:
- when you acquired it
- when you donated it
- how you acquired it
- what it cost you
- the current value (Fair Market Value- FMV)
- how you determined the FMV
The charitable organization must sign Form 8283 also, acknowledging that they are a recognized tax-exempt organization under section 170(c). Then you sign, and you’re ready to claim that tax deduction!