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How to Protect Charitable Donations From IRS Nitpicking

If the total of all your contributions of property is more than $500 you must file Form 8283 Noncash Charitable Contributions. In most cases you only need to complete Section A. You must list:

1. the name and address of the charity(ies) to whom you made the donation(s)

2. the date of the contribution(s)

3. the fair market value of the items donated

4. how you determined the fair market value -- i.e. "thrift shop value" "estimate", "Salvation Army valuation guide"

If any one individual item has a value of more than $500 you must also list:

1. the date you acquired the property

2. how you acquired the property -- i.e. purchase, gift, inheritance, exchange

3. the cost or adjusted basis of the property

The $250 rule discussed above also applies to non-cash donations.

Whenever you contribute used books, clothing, furniture or household items to a church or charity be sure to make and keep a detailed listing of the items donated with the condition and value of each set of items (i.e. 6 pairs of men's pants, good condition = $60.00, 5 pairs of men's shoes, good condition = $75.00). You may want to attach a copy of this list to the Form 8283.

The Tax Court has also upheld the IRS disallowance of deductions for non-cash contributions because of inadequate documentation. In one case where a taxpayer simply provided copies of receipts received from Goodwill, the Court denied the deduction because the receipts from Goodwill did not provide "anything more than vague descriptions of the items donated."

Bottom line: if you want to claim a tax deduction for contributions of cash or used items to a qualified church or charity make sure you receive and maintain proper acknowledgement and documentation, with all the required information and statements included.

More on taxes:

To Obamacare Taxes Hitting High Income Earners

How to A letter from the IRS? Uh-oh. But don't panic.

Uncle Sam wants to help you pay for college

--By Robert Flach

Robert Flach has more than 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.

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