Do you plan to donate your services to charity this summer?  Will you travel as part of the service?  If so, some travel expenses may help lower your taxes when you file your tax return next year.  Here are five tax tips you should know if you travel while giving your services to charity.

1.  You can’t deduct the value of your services that you give to charity.  But you may be able to deduct some out-of-pocket costs you pay to give your services.  This can include the cost of travel. All out-of pocket costs must be:

• un-reimbursed,
• directly connected with the services,
• expenses you had only because of the services you gave, and
• not personal, living or family expenses.
  

2.  Your volunteer work must be for a qualified charity.  Most groups other than churches and governments must apply to the IRS to become qualified.  Ask the group about its IRS status before you donate.  You can also use the Select Check tool on IRS.gov to check the group’s status.

3.  Some types of travel do not qualify for a tax deduction.  For example, you can’t deduct your costs if a significant part of the trip involves recreation or a vacation.  For more on these rules see Publication 526, Charitable Contributions.

4.  You can deduct your travel expenses if your work is real and substantial throughout the trip.  You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.

5.  Deductible travel expenses may include:

• air, rail and bus transportation,
• car expenses,
• lodging costs,
• the cost of meals, and
• taxi or other transportation costs between the airport or station and your hotel.
  

For more see Publication 526, Charitable Contributions.  You can get it on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

If you are looking for a tax deduction, giving to charity can be a ‘win-win’ situation.  It’s good for them and good for you.  Here are eight things you should know about deducting your gifts to charity:

1.  You must donate to a qualified charity if you want to deduct the gift.  You can’t deduct gifts to individuals, political organizations or candidates.

2.  In order for you to deduct your contributions, you must file Form 1040 and itemize deductions.  File Schedule A, Itemized Deductions, with your federal tax return.

3.  If you get a benefit in return for your contribution, your deduction is limited.  You can only deduct the amount of your gift that’s more than the value of what you got in return.  Examples of such benefits include merchandise, meals, tickets to an event or other goods and services.

4.  If you give 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.  Used clothing and household items generally must be in good condition to be deductible.  Special rules apply to vehicle donations.

6.  You must file Form 8283, Non-cash Charitable Contributions, if your deduction for all non-cash gifts is more than $500 for the year.

7.  You must keep records to prove the amount of the contributions you make 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.  It can be a cancelled check, a letter from the organization, or a bank or payroll statement.  It should include the name of the charity, the date and the amount donated.  A cell phone bill meets this requirement for text donations if it shows this same information.

8.  To claim a deduction for donated cash or property of $250 or more, you must have a written statement from the organization.  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.

Giving to charity may make you feel good and help you lower your tax bill. The IRS offers these nine tips to help ensure your contributions pay off on your tax return.

1. If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization or a political candidate

2. You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event or other goods and services.

4. Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.

5. Fair market value is generally the price at which someone can sell the property.

6. You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.

7. To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.

8. You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.

9. If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.

WASHINGTON — Individuals and businesses making contributions to charity should keep in mind some key tax provisions that have taken effect in recent years, especially those affecting donations of clothing and household items and monetary donations.

Rules for Clothing and Household Items

To be deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Reminders

To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:

• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2012 count for 2012. This is true even if the credit card bill isn’t paid until 2013. Also, checks count for 2012 as long as they are mailed in 2012.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. Exempt Organization Select Check, a searchable online database available on IRS.gov, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2012 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
• The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
• And, as always it’s important to keep good records and receipts.

IRS.gov has Additional information on charitable giving including:

• Charities & Non-Profits
• Publication 526, Charitable Contributions
• Online mini-course, Can I Deduct My Charitable Contributions?

Contributing money and property are ways that you can support a charitable cause, but in order for your donation to be tax-deductible, certain conditions must be met.  Read on for six things the IRS wants taxpayers to know about deductibility of donations.  [MORE] . . .