Non-Cash Charitable Donations
Nov. 11, 2019 Article

Non-Cash Charitable Donations

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As year-end approaches, many investors will seek to offset potential tax liabilities by maximizing charitable donations. Making non-cash contributions can be a great way to do so. Following are answers to commonly asked questions regarding charitable donations. 

Question 1: What are the requirements for using charitable donations to offset my tax liabilities?

Answer: Charitable donations can only be used to reduce your tax liabilities if you itemize deductions on your tax return. Typically, you would itemize if the combined total of your anticipated deductions, including charitable contributions, equals more than the standard deduction (in 2019, $12,200 for individuals, $24,400 married filing jointly1).

To be eligible for a charitable deduction, the contribution must be made to a qualified organization. Gifts to individuals are never deductible. Also, if you receive a benefit from the contribution to the qualified organization, such as admission to an event, goods or services, you are only eligible to deduct the amount that exceeds the fair market value of the benefit received. 

Question 2: How can I deduct non-cash donations?

Answer: For any non-cash charitable contribution of $250 or more, you must maintain a receipt from the qualified organization. In addition to providing a description of the donation, this receipt must also state whether any goods or services were provided in exchange for the donation as well as the value of such goods/services. 

If the amount of the non-cash donation is greater than $500, the IRS requires you to include Form 8283 with your tax return. If the amount of the non-cash donation is more than $5,000, you will also need a qualified appraisal of the non-cash property.2 

Question 3: Is there a limit to the amount I can deduct?

Answer: Yes, and the limit varies based on the type of charitable organization that receives your donation.

  • When you make donations to public organizations such as churches, educational institutions and hospitals, your total charitable deduction (including both cash and non-cash donations) cannot exceed 50 percent of your adjusted gross income (AGI).
  • When you make donations to private organizations such as veterans’ groups, fraternal societies, nonprofit cemeteries and certain private foundations, the maximum deduction cannot exceed 30 percent of your AGI.
  • For additional information on which limitations apply to the organizations you support, use the IRS’s Tax Exempt Organization Search tool.3  

Questions?

As always, your wealth advisor serves as your partner in planning for your financial future. If you have any questions regarding non-cash charitable donations, don’t hesitate to reach out. 

 

1irs.gov

2“Topic No. 506 Charitable Contributions,” IRS

3“Charitable Contribution Deductions,” IRS

The views expressed are for commentary purposes only and do not take into account any individual personal, financial, legal or tax considerations. As such, the information contained herein is not intended to be personal legal, investment or tax advice. Nothing herein should be relied upon as such, and there is no guarantee that any claims made will come to pass. The opinions are based on information and sources of information deemed to be reliable, but Mariner Wealth Advisors does not warrant the accuracy of the information that this opinion and forecast is based upon.

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