Eight Tax Tips about Deducting Charitable Contributions

When you give a gift to charity that helps the lives of others in need, it may also help you at tax time. You may be able to claim the gift as a deduction that may lower your tax. Here are eight tax tips you should know about deducting your gifts to charity:

1. Qualified Charities. You must donate to a qualified charity to be able to deduct the gift. You can’t deduct gifts to individuals, political organizations or candidates. To check the status of a charity, visit www.IRS.gov

2. Itemized Deduction. To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with your federal tax return. If you use the standard deduction, you cannot deduct charitable contributions.

3. Benefit in Return. If you get something in return for your donation, your deduction is limited. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services. :

4. Donated Property. If you gave property instead of cash, the deduction is usually that item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market. :

5. Clothing and Household Items. Used clothing and household items must be in good condition or better to be deductible in most cases. Special rules apply to cars, boats and other types of property donations. See Publication 526, Charitable Contributions, for more on these rules. :

6. Form 8283. You must file Form 8283, Noncash Charitable Contributions, if your deduction for all noncash gifts is more than $500 for the year. :

7. Records to Keep. You must keep records to prove the amount of the contributions you made during the year. The kind of records you must keep depends on the amount and type of your donation. For example, you must have a written record of any cash you donate, regardless of the amount, in order to claim a deduction. For more about what records to keep refer toPublication 526. :

8. Donations of $250 or More. To claim a deduction for donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether the organization provided any goods or services in exchange for the gift. :

Additional IRS Resources available at www.irs.gov

• Interactive Tax Assistant tool

• Publication 561, Determining the Value of Donated Property

• IRS Tax Map

IRS YouTube Videos:

• Fair Market Value of Charitable Donations – available in English | Spanish | ASL

From IRS

Bartering Income: Yes, It's Taxable

Bartering is the trading of one product or service for another. Often there is no exchange of cash. Some businesses barter to get products or services they need. For example, a gardener might trade landscape work with a plumber for plumbing work. If you barter, you should know that the value of products or services from bartering is taxable income. This is true even if you are not in business.

Here are a few facts about bartering:

• Bartering income. Both parties must report the fair market value of the product or service they get as income on their tax return.

• Barter exchanges. A barter exchange is an organized marketplace where members barter products or services. Some operate out of an office and others over the Internet. All barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. Exchanges must give a copy of the form to its members who barter each year. They must also file a copy with the IRS.

• Trade Dollars. Exchanges trade barter or trade dollars as their unit of exchange in most cases. Barter and trade dollars are the same as U.S. currency for tax purposes. If you earn trade and barter dollars, you must report the amount you earn on your tax return.

• Tax implications. Bartering is taxable in the year it occurs. The tax rules may vary based on the type of bartering that takes place. Barterers may owe income taxes, self-employment taxes, employment taxes or excise taxes on their bartering income.

• Reporting rules. How you report bartering on a tax return varies. If you are in a trade or business, you normally report it on Form 1040,Schedule C, Profit or Loss from Business.

For more information, see the following resources at IRS.gov

• Tax Topic 420 - Bartering Income

• Publication 525, Taxable and Nontaxable Income

• Filing Your Taxes

• IRS Tax Map

• The Bartering Tax Center

IRS YouTube Videos: Miscellaneous Income – English | Spanish | ASL