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Monday December 22, 2014

Washington News

Washington Hotline

IRS Tips for Year-End Gifts

In IR-2013-98 the IRS published a list of tips for year-end gifts. These tips include IRS suggestions for the IRA charitable rollover, gifts of clothing and household items, cash gifts and additional substantiation rules.

1. IRA Rollover – IRA owners over age 70½ may transfer up to $100,000 directly from the custodian to a qualified charity. This transfer may fulfill the required minimum distribution requirement for 2013. Generally, most public charities may receive the IRA rollover gift. It is not permitted if the transfer is to a donor advised fund or supporting organization.

2. Clothing and Household Items – These gifts must be in good used or better condition. If the gift is over $500, that requirement doesn't apply if the donor obtains an appraisal. Gifts of $250 or more continue to require a receipt from the charity. These rules apply to household goods, furniture, electronics, appliances and linens.

3. Cash Gifts – A gift of cash requires a bank record or a written statement from the charity. It should show the name of the charity, the date and amount of the gift. A bank record may be a cancelled check, a credit card statement or a credit union statement. Cash donation rules apply to transfers of currency, checks, electronic funds transfers, credit card gifts and payroll deductions. For payroll deductions, the employee should retain a statement from the employer with the withheld amounts and names of the charity. If a charitable gift is $250 or more, the receipt (contemporaneous written acknowledgement) is still required.

4. Receipts – The receipt from a charity should indicate the description of a property gift. The donor will need to substantiate the fair market value and state the method used to determine the gift amount. The receipt will normally also include the "no goods or services were provided" statement.

5. Car, Boat, RV, Airplane – For a gift of a vehicle, the taxpayer must file IRS Form 1098-C. In most circumstances, the vehicle is sold by the charitable organization and the deduction will be the sale value. This requirement applies to deductions over $500 in value.

6. Itemizers – If a taxpayer takes the standard deduction, then there is no charitable benefit from gifts (however, the nonitemizer may still use the IRA charitable rollover). In order to benefit from charitable deductions, the taxpayer is required to itemize deductions.

7. Non-Cash Gifts over $500 – For gifts of property such as public stock with value over $500, the initial section of IRS Form 8283 must be completed and included with IRS Form 1040.

8. Major Property Gifts – If land, buildings or other major assets (other than publicly-traded stocks or bonds) are given to charity and the value is over $5,000, then a qualified appraisal will be required.

Published December 20, 2013

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