IRS Offers Tips for Dealing with Notices

Each year, the IRS sends millions of letters and notices to taxpayers for a variety of reasons. Here are ten things you should know about IRS notices in case one shows up in your mailbox.

1. Don’t panic. Many of these letters require a simple response.

2. There are many reasons why the IRS sends correspondence. If you receive an IRS notice, it will typically cover a very specific issue about your account or tax return. Notices may require payment, notify you of changes to your account or ask you to provide more information.

3. Each notice offers specific instructions on what you need to do to satisfy the inquiry.

4. If you receive a notice advising you that the IRS has corrected your tax return, you should review the correspondence and compare it with the information on your return.

5. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

6. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree. Include any information and documents you want the IRS to consider with your response. Mail your reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. You should be able to resolve most notices that you receive without calling or visiting an IRS office. If you do have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your inquiry.

8. Remember to keep copies of any notices you receive with your other income tax records.

9. The IRS sends notices and letters by mail. The agency never contacts taxpayers about their tax account or tax return by email.

10. For more information about IRS notices and bills, visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. The publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Responding to a Notice
• Publication 594, The IRS Collection Process

IRS YouTube Videos:

• Received a Letter from the IRS? - English | Spanish | ASL

Tips to Start Planning Next Year's Tax Return

For most taxpayers, the tax deadline has passed. But planning for next year can start now. The IRS reminds taxpayers that being organized and planning ahead can save time and money in 2014. Here are six things you can do now to make next April 15 easier.

1. Adjust your withholding.  Each year, millions of American workers have far more taxes withheld from their pay than is required. Now is a good time to review your withholding to make the taxes withheld from your pay closer to the taxes you’ll owe for this year. This is especially true if you normally get a large refund and you would like more money in your paycheck. If you owed tax when you filed, you may need to increase the federal income tax withheld from your wages. Use the IRS Withholding Calculator at IRS.gov to complete a new Form W-4, Employee's Withholding Allowance Certificate.

2. Store your return in a safe place.  Put your 2012 tax return and supporting documents somewhere safe. If you need to refer to your return in the future, you’ll know where to find it. For example, you may need a copy of your return when applying for a home loan or financial aid. You can also use it as a helpful guide for next year's return.

3. Organize your records.  Establish one location where everyone in your household can put tax-related records during the year. This will avoid a scramble for misplaced mileage logs or charity receipts come tax time.

4. Shop for a tax professional.  If you use a tax professional to help you with tax planning, start your search now. You’ll have more time when you're not up against a deadline or anxious to receive your tax refund. Choose a tax professional wisely. You’re ultimately responsible for the accuracy of your own return regardless of who prepares it. Find tips for choosing a preparer at IRS.gov.

5. Consider itemizing deductions.  If you usually claim a standard deduction, you may be able to reduce your taxes if you itemize deductions instead. If your itemized deductions typically fall just below your standard deduction, you can ‘bundle’ your deductions. For example, an early or extra mortgage payment or property tax payment, or a planned donation to charity could equal some tax savings. See the Schedule A, Itemized Deductions, instructions for the list of items you can deduct. Planning an approach now that works best for you can pay off at tax time next year.

6. Keep up with changes.  Find out about tax law changes, helpful tips and IRS announcements all year by subscribing to IRS Tax Tips through IRS.gov or IRS2Go, the mobile app from the IRS. The IRS issues tips regularly during the summer and tax filing season.

You can find forms and publications at IRS.gov or order them by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• IRS Withholding Calculator tool
• Form W-4, Employee's Withholding Allowance Certificate
• Publication 505, Tax Withholding and Estimated Tax
• Publication 552, Recordkeeping for Individuals
• Choosing a Tax Professional
• Schedule A, Itemized Deductions and instructions

IRS YouTube Videos:

• IRS Withholding Calculator - English | Spanish | ASL
• IRS2Go 3.0 - English | Spanish
• Record Keeping - English | Spanish | ASL
• Standard Versus Itemized Deductions - English | Spanish |ASL

IRS Podcasts:

• Standard Versus Itemized Deductions - English | Spanish
• IRS2Go 3.0 - English | Spanish

Ten Helpful Tips for Paying Your Taxes

Are you making a payment with your federal tax return this year? If so, here are 10 important things the IRS wants you to know about correctly paying your federal income taxes.

1. Never send cash.

2. If you file electronically, you can file and pay in a single step with an electronic funds withdrawal. If you e-file by yourself you can use your tax preparation software to make the withdrawal. If you use a tax preparer to e-file, you can ask the preparer to make your tax payment electronically.

3. Whether you file a paper return or e-file your return, you can pay by phone or online with a credit or debit card. The company that processes your payment will charge a processing fee.

4. If you file Schedule A, Itemized Deductions, you may be able to deduct the credit or debit card processing fee on next year’s return. This is a miscellaneous itemized deduction subject to the 2 percent limit.

5. Electronic payment options provide another way to pay taxes by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and click on the ‘Payments’ tab near the top left of the home page for more details.

6. If you pay by check or money order, make sure it is payable to the “United States Treasury.”

7. Be sure to write your name, address and daytime phone number on the front of your payment. Also, write the tax year, form number you are filing and the first Social Security number listed on your tax return.

8. Complete Form 1040-V, Payment Voucher, and include it with your tax return and payment when mailing it to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently. Go to IRS.gov to download and print this form.

9. Remember to enclose your payment with your return but do not staple it to any tax form.

10. For more information, call 800-829-4477 and select TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in the Form 1040-V instructions available at IRS.gov.

Additional IRS Resources:

• IRS Free File
• E-file Options
• Electronic Payment Options Home Page
• Payments (payment options)
• Form 1040-V, Payment Voucher
• Tax Topic 158 - Ensuring Proper Credit of Payments

IRS YouTube Videos:

• IRS Tax Payment Options - English | Spanish | ASL

IRS Podcasts:

• IRS Tax Payment Options - English | Spanish 

Six Tips on Making Estimated Tax Payments

Some taxpayers may need to make estimated tax payments during the year. The type of income you receive determines whether you must pay estimated taxes. Here are six tips from the IRS about making estimated tax payments.

1. If you do not have taxes withheld from your income, you may need to make estimated tax payments. This may apply if you have income such as self-employment, interest, dividends or capital gains. It could also apply if you do not have enough taxes withheld from your wages. If you are required to pay estimated taxes during the year, you should make these payments to avoid a penalty.

2. Generally, you may need to pay estimated taxes in 2013 if you expect to owe $1,000 or more in taxes when you file your federal tax return. Other rules apply, and special rules apply to farmers and fishermen.

3. When figuring the amount of your estimated taxes, you should estimate the amount of income you expect to receive for the year. You should also include any tax deductions and credits that you will be eligible to claim. Be aware that life changes, such as a change in marital status or a child born during the year can affect your taxes. Try to make your estimates as accurate as possible.

4. You normally make estimated tax payments four times a year. The dates that apply to most people are April 15, June 17 and Sept. 16 in 2013, and Jan. 15, 2014.

5. You should use Form 1040-ES, Estimated Tax for Individuals, to figure your estimated tax.

6. You may pay online or by phone. You may also pay by check or money order, or by credit or debit card. You’ll find more information about your payment options in the Form 1040-ES instructions. Also, check out the Electronic Payment Options Home Page at IRS.gov. If you mail your payments to the IRS, you should use the payment vouchers that come with Form 1040-ES.

For more information about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. Forms and publications are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Publication 505, Tax Withholding and Estimated Tax
• Form 1040-ES, Estimated Tax for Individuals
• Electronic Payment Options Home Page

IRS YouTube Videos:

• Estimated Tax Payments - English | Spanish | ASL

IRS Podcast:

• Estimated Tax Payments - Spanish

HAPPY APRIL 15TH!!!!!!!

Get Credit for Making Your Home Energy-Efficient

If you made your home more energy efficient last year, you may qualify for a tax credit on your 2012 federal income tax return. Here is some basic information about home energy credits that you should know.

Non-Business Energy Property Credit 

• You may claim a credit of 10 percent of the cost of certain energy saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs. 
• In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. Each type of property has a different dollar limit. Examples include the cost of qualified water heaters and qualified heating and air conditioning systems.
• This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
• Your main home must be located in the U.S. to qualify for the credit.
• Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website or with the product’s packaging.
• The credit was to expire at the end of 2011. A recent law extended it for two years through the end of 2013.

Residential Energy Efficient Property Credit

• This tax credit is 30 percent of the cost of alternative energy equipment that you installed on or in your home.
• Qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines.
• There is no limit on the amount of credit available for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
• You must install qualifying equipment in connection with your home located in the United States. It does not have to be your main home.
• The credit is available through 2016.

Use Form 5695, Residential Energy Credits, to claim these credits. You can get Form 5695 at IRS.gov or order it by calling 1-800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Form 5695, Residential Energy Credits
• Publication 17, Your Federal Income Tax

Nine Tips on Deducting Charitable Contributions

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.

For more information on charitable contributions, see Publication 526, Charitable Contributions. For information about noncash contributions, see Publication 561, Determining the Value of Donated Property. Forms and publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Publication 526, Charitable Contributions
• Publication 561, Determining the Value of Donated Property
• Schedule A, Itemized Deductions
• Form 8283, Noncash Charitable Contributions

IRS YouTube Videos:

• Fair Market Value of Charitable Donations - English |Spanish | ASL

Last-Minute Filers: Avoid Common Errors

IRS YouTube Video: Tax Return Errors English | Spanish | ASL

Podcast: Tax Return Errors English | Spanish

WASHINGTON — The Internal Revenue Service today reminded taxpayers to review their tax returns for common errors that could delay the processing of their returns. Here are some ways to avoid common mistakes.

File electronically. Filing electronically, whether through e-fileor IRS Free File, vastly reduces tax return errors, as the tax software does the calculations, flags common errors and prompts taxpayers for missing information. And best of all, there is a free option for everyone.

Mail a paper return to the right address. Paper filers should check the appropriate address where to file in IRS.gov or their form instructions to avoid processing delays.

Take a close look at the tax tables. When figuring tax using thetax tables, taxpayers should be sure to use the correct column for the filing status claimed.

Fill in all requested information clearly. When entering information on the tax return, including Social Security numbers, take the time to be sure it is correct and easy to read. Also, check only one filing status and the appropriate exemption boxes.

Review all figures. While software catches and prevents many errors on e-file returns, math errors remain common on paper returns.

Get the right routing and account numbers. Requesting direct deposit of a federal refund into one, two or even three accounts is convenient and allows the taxpayer access to his or her money faster. Make sure the financial institution routing and account numbers entered on the return are accurate. Incorrect numbers can cause a refund to be delayed or deposited into the wrong account.

Sign and date the return. If filing a joint return, both spouses must sign and date the return. E-filers can sign using a self-selected personal identification number (PIN).

Attach all required forms. Paper filers need to attach W-2s and other forms that reflect tax withholding, to the front of their returns. If requesting a payment agreement with the IRS, also attach Form 9465 or Form 9465-FS to the front of the return. Attach all other necessary schedules and forms in sequence number order shown in the upper right-hand corner.

Keep a copy of the return. Once ready to be filed, taxpayers should make a copy of their signed return and all schedules for their records.

Request a Filing Extension. For taxpayers who cannot meet the April 15 deadline, requesting a filing extension is easy and will prevent late filing penalties. Either use Free File or Form 4868. But keep in mind that while an extension grants additional time to file, tax payments are still due April 15.

Owe tax? If so, a number of e-payment options are available. Or send a check or money order payable to the “United States Treasury.”

Sells Winners: 39 Candidates Score 95.50 or Higher on CPA Exam

Posted: 12 Apr 2013 04:00 AM PDT The 2012 Elijah Watt Sells Award winners were announced on March 26. Just a total of 39 individuals performed so well on the CPA Exam in 2012 to have earned this prestigious title. Considering there were more than 92,000 candidates who sat for the CPA exam in 2012, the 39 recipients have made an immense achievement indeed! Perhaps congratulations are in order? What does it take to be a Sells winner? The award is presented to candidates who have obtained a cumulative average score above 95.50 across all four sections of the CPA Exam, completed testing during the 2012 calendar year and passed all four sections of the CPA Exam on their first attempt. The talented individuals listed below are the 2012 Sells Award winners in alphabetical order, followed by their state board affiliation, education and present employer. Jill Aoki (Utah), a Utah State University graduate with a triple BA in Accounting, Finance and Economics, and a Master of Accountancy, is employed with Ernst & Young LLP in Salt Lake City. Blake Applegate (Illinois), an Indiana University graduate with a BA in Accounting and a Master of Accountancy, is employed with KPMG in Chicago. Bradley Bowen (Texas), a Texas A&M University graduate with a BA in Accounting and a Master of Accountancy, is employed with Ernst & Young LLP in Dallas. James Braun (Texas), a University of Texas at Austin graduate with a BA in Business Administration and a Master of Professional Accountancy, is employed with Ernst & Young LLP in Houston. Alan Burton (Kansas), a Fort Hays State University graduate with a BA in Accounting, is employed with Adams, Brown, Beran & Ball, Chtd. in Great Bend, Kansas. Andrew Buss (Minnesota), a University of Wisconsin – Madison graduate with a BBA in Accounting and a Master of Accountancy, is employed with Ernst & Young LLP in Minneapolis. David Canedo (Wisconsin), a University of Wisconsin – Madison graduate with a BA in Accounting and a Master of Professional Accountancy. David Carlson (Massachusetts), a Bentley University graduate with a BA in Accounting and an anticipated Master of Financial Planning in August 2013, is employed with PricewaterhouseCoopers LLP in Boston. Devin Davidson (Washington), a Brigham Young University graduate with a BA in Accounting and a Master of Accountancy, is employed with Davidson Farms LLC in Basin City, Washington. Angel Davis (Oregon), a University of Oregon graduate with a BA in Accounting and a Master of Accountancy, is employed with Precision Castparts Corp. in Portland. Dodge Docheff (Missouri), a University of Central Missouri graduate with a BA in Business Administration and a Master of Accountancy, is employed with BKD, LLP in Kansas City. Codie Dull (Wisconsin), a University of Wisconsin – Madison graduate with a BA in Business Administration and a Master of Professional Accountancy, is employed with PricewaterhouseCoopers LLP in Milwaukee. Martha Everett (Michigan), a University of Michigan graduate with a BA in Business Administration and a Master of Accountancy, is employed with Plante Moran in Clinton Township, Michigan. Alan Gnegy (Virginia), a West Virginia University graduate with a BA in Accounting, is employed with Pillar Innovations LLC in Grantsville, MD. Michael Gorter (Minnesota), a Dordt College graduate with a BA in Accounting and Finance, is employed with Deloitte and Touche LLP in Minneapolis. Yun Guo (North Carolina), a Minzu University of China graduate with a BA in Economics and Finance and a Master of Accountancy from Wake Forest University, is employed with PricewaterhouseCoopers LLP in New York. Laura Hilby (Iowa), a Buena Vista University graduate with a BS in Accounting and Corporate Mathematics is employed with McGladrey LLP in Des Moines, IA. Stephen Hruby (Ohio), a John Carroll University graduate with a BS in Business Administration and Accounting is employed with PricewaterhouseCoopers LLP in Cleveland. Kevin King (Indiana), an Indiana University graduate with a BS in Accounting and a Master of Accountancy, is employed with Ernst & Young LLP in Indianapolis. Tyler Kleppe (Wisconsin), a University of Wisconsin – Whitewater graduate with a BA in Accounting and a Master of Professional Accountancy, is employed with Smith & Gesteland, LLP in Madison, WI. Veronika Krasteva (Florida), a University of Miami graduate with a BA in Business Administration and a Master of Accounting, is employed with Deloitte & Touche, LLP in Miami. Brian Krogol (Florida), a University of Florida graduate with a BS in Accounting and a Master of Professional Accountancy, is employed with Grant Thornton in Miami. Anthony Lemon (Utah), a Utah State University graduate with a BS in Accounting and a Master of Accounting, is employed with PricewaterhouseCoopers LLP in Salt Lake City. William McGauran (Virginia), an American University, Washington D.C. graduate with a BS in Accounting, is employed with Deloitte Financial Advisory Services LLP in Arlington, VA. Andrew Napolitano (California), a University of California, Los Angeles (UCLA) graduate with a BA in Business Economics, is employed with PricewaterhouseCoopers, LLP in Los Angeles. Eliza Nesvog (Washington), a University of Washington graduate with a BA in Business Administration and a Master of Professional Accountancy, is employed with Ernst & Young LLP in Seattle. Bradley Ostendorf (Minnesota), a Minnesota State University – Moorhead graduate with a BS in Accounting, is employed with McGladrey LLP in Minneapolis. Brighton Ranney (Missouri), a University of Wisconsin – Madison graduate with a BS in Computer Science who holds a Master of Accounting from the University of Missouri - St. Louis, is employed with Moneta Group in Clayton, MO. Glenn Rice (New York), a Hofstra University graduate with a BA in Accounting, is employed with PricewaterhouseCoopers, LLP in New York. Anthony Salomone (New York), a Boston College graduate with a BS in Accounting and Finance, is employed with PricewaterhouseCoopers, LLP in New York. Brent Schmidt (Ohio), a Miami University – (Oxford Ohio) graduate with a BS in Business Accounting, is employed with BKD, LLP in Cincinnati. Kimberly Shriver (Georgia), a University of Georgia graduate with a BA in Accounting and a Master of Accountancy, is employed with Ernst & Young LLP in Atlanta. Mark Stankevitz (Massachusetts), a University of Chicago graduate with a BA in Economics and a Master of Accounting from Boston College, is employed with Grant Thornton, LLP. Jennifer Tindle (Texas), a Southwestern University graduate with a BA in Accounting and a Master of Accountancy from Vanderbilt University, is employed with PricewaterhouseCoopers LLP in Houston. Mingyuan Wang (Illinois), a Beijing Language and Culture University graduate with a BA in Accounting and a Master of Accountancy from University of Illinois at Urbana-Champaign, is employed with Constantin Associates LLP in New York. Kevin Warbis (Ohio), a Miami University graduate with a BS in Accounting, is employed with PricewaterhouseCoopers LLP in Columbus, OH. Adam Wright (Texas), a University of Texas – Austin graduate with a BBA in  Accounting, is employed with the Texas State Auditor’s Office in Austin. Po-Feng Yu (Colorado), a National Taiwan University graduate with a BA in Accounting and a Master of Accountancy from University of Illinois at Urbana-Champaign, is employed with Deloitte & Touche LLP in Taiwan. Ning Zhu (Texas), a Georgetown University graduate with a BS in Business Administration, is employed with PricewaterhouseCoopers LLC in Houston. Elijah Watt Sells, who passed away in 1924, was one of the country’s first CPAs and was active in the establishment of the AICPA. He was also a founder of New York University’s School of Commerce, Accounts and Finance. The Sells award was created by the AICPA in 1923 in his honor.

Top Six Tax Tips for the Self-Employed

When you are self-employed, it typically means you work for yourself, as an independent contractor, or own your own business. Here are six key points the IRS would like you to know about self-employment and self-employment taxes:

1. Self-employment income can include pay that you receive for part-time work you do out of your home. This could include income you earn in addition to your regular job.

2. Self-employed individuals file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with their Form 1040.

3. If you are self-employed, you generally have to pay self-employment tax as well as income tax. Self-employment tax includes Social Security and Medicare taxes. You figure this tax using Schedule SE, Self-Employment Tax.

4. If you are self-employed you may have to make estimated tax payments. People typically make estimated tax payments to pay taxes on income that is not subject to withholding. If you do not make estimated tax payments, you may have to pay a penalty when you file your income tax return. The underpayment of estimated tax penalty applies if you do not pay enough taxes during the year.

5. When you file your tax return, you can deduct some business expenses for the costs you paid to run your trade or business. You can deduct most business expenses in full, but some costs must be ’capitalized.’ This means you can deduct a portion of the expense each year over a period of years.

6. You may deduct only the costs that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.

For more information, visit the Small Business and Self-Employed Tax Center on the IRS website. There are three IRS publications that will also help you. See Publications 334, Tax Guide for Small Business; 535, Business Expenses and 505, Tax Withholding and Estimated Tax. All tax forms and publications are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Small Business and Self-Employed Tax Center
• Publication 334, Tax Guide for Small Business
• Publication 535, Business Expenses
• Publication 505, Tax Withholding and Estimated Tax
• Schedule C, Profit or Loss from Business
• Schedule C-EZ, Net Profit from Business
• Schedule SE, Self-Employment Tax
• Form 1040-ES, Estimated Tax for Individuals

IRS YouTube Videos:

• Estimated Tax Payments - English | Spanish | ASL

IRS Podcast:

• Estimated Tax Payments - Spanish

Nine Tips on Deducting Charitable Contributions

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.

For more information on charitable contributions, see Publication 526, Charitable Contributions. For information about noncash contributions, see Publication 561, Determining the Value of Donated Property. Forms and publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Publication 526, Charitable Contributions
• Publication 561, Determining the Value of Donated Property
• Schedule A, Itemized Deductions
• Form 8283, Noncash Charitable Contributions

IRS YouTube Videos:

• Fair Market Value of Charitable Donations - English |Spanish | ASL