Do not fill Form 8283 to report any amounts you may have donated through your credit card or check. These are considered as monetary donations, and do not qualify to be mentioned and claimed for in the form.
Every responsible citizen, at some point, does donate something or the other to charitable organizations and nonprofits. Form 8283 is required if the combined monetary value of these items exceeds a particular amount. You can claim for that amount by submitting this form. Do not have any confusion regarding who needs to file Form 8283. This form must be filled only if the combined market value of the donated stuff (practically every item apart from liquid cash) exceeds the pre-fixed amount. If it is within limits, you cannot claim any deductions on the form, even if you have contributed to charity. You have to attach this to your tax returns. The instructions to fill Form 8283 are summarized below.
- As already mentioned in the introduction, Form 8283 is used for claiming the FMV (fair market value) of donated items (if you have donated, that is).
- The purpose is to claim for the charitable contributions so that you can deduct the value on your tax.
- These deductions are approved by the Federal tax law. The IRS permits the deduction of the FMV of the donated items. You can thus, fill this form if the total amount is more than USD 5,000.
- These contributions can be claimed on Schedule A of the form. You also need to furnish additional information about the contributions.
- After filling out the necessary details, attach it to your 1040 income tax return.
- You need to keep track of your donations - if you have not, use online tools that help you track your donations and find out the IRS-approved value.
- You also need to obtain qualified appraisals for donations, like books, property, art, etc.
- The appraisals must be done by subject experts and must include a description about the item and its present condition.
- The paragraphs below instruct you on how to complete Form 8283.
- Go through the form first - do not start filling it right away.
- You will observe that you have to fill up 2 pages, while the rest of the pages consist of essential information and instructions.
- The form contains 2 sections - A and B. Depending on what property and amount you are claiming for, you may need to fill out either of the sections or both.
- If you have donated an item or groups of similar items (used clothing, household stuff, etc.) and their market value exceeds USD 5,000, you can fill out this section.
- You can find out the price of the items by cross-checking the amount for the same item from thrift stores.
- If you have donated a used vehicle, do not refer to the standard dealership price. Consider the model, design, mileage, and other factors, after which you can decide the price.
- Check part I of section A. List the name and address of the organizations to whom you have donated items. This is to be filled from line 1(a) (A to E).
- Line 1(b) (A to E) is to be filled only if you have donated a vehicle.
- Line 1(c) (A to E) contains the description of the donated items.
- Line 1(d) (A to E) contains the date when the contribution was made, while line 1(e) (A to E) contains the date acquired by the owner.
- These records can be found with the organization itself.
- Line 1(f) (A to E) and line 1(g) (A to E) contain information regarding how the owner acquired the item (purchase or gift) and how much it cost him, respectively.
- Line 1(h) (A to E) contain the fair market value. This is the amount that a willing buyer pays to a willing seller. Depending upon the property, the FMV may be deducted from the contributions.
- Line 1(i) (A to E) lists the method you have used to find out the FMV.
- Note that lines 1(e), 1(f), and 1(g) need not be filled if the item you have claimed a deduction for is less than USD 500.
- Enter part II of section A. If you have given lesser than an entire interest on any listed property in part I, fill lines 2(a) to 2(e). If not, skip line 2.
- On line 2(a), enter that letter from part I, which indicates the property for which you have given less than an entire interest.
- Line 2(b) contains the amount claimed as deduction.
- In line 2(c), you have to give the details of the organization (if it is different from the ones mentioned earlier).
- On line 2(d), enter the property location area.
- If anyone else owns the property apart from the organization, enter his name on line 2(e).
- Line 3 is a 'Yes/No' section. Line 3(a) - If there is any kind of restriction on the organization to use the property, check 'Yes', or else check 'No'.
- Line 3(b) - If you have given someone else the right to this property (apart from the organization), check 'Yes', or check 'No'.
- Line 3(c) - If there is any restriction to use the donated item, check 'Yes', or else check 'No'.
- Proceed to Section B. This section has to be filled if the deduction claimed is more than USD 5,000.
- In Part I, check on whatever property you have donated - books, art, etc.
- You will need to attach an appraisal for certain items.
- Line 5(a) (A to E) contains the description of the property.
- Line 5(b) (A to E) contains the physical condition of the property during donation.
- Line 5(c) (A to E) contains the appraised FMV.
- Line 5(d) (A to E) contains the date when the owner acquired the property.
- Line 5(e) (A to E) contains the information regarding how the property came into the owner's possession (purchase, gift, etc.).
- Line 5(f) (A to E) contains the basis, i.e., how much the property cost the owner.
- Line 5(g) (A to E) contains the bargain amount (if any).
- Line 5(h) (A to E) contains the claimed deduction amount (if you do not need an appraisal).
- Line 5(i) (A to E) contains the donation date.
- Part II of Section B is a declaration from the taxpayer.
- Part III contains a declaration from the appraiser along with his personal details.
- Part IV contains the acknowledgement from the charitable organization. All the personal details of the organization are included here.
Some Vital Points
- The appraisal should not be made 2 months prior to the donation date.
- A deduction cannot be claimed on buildings in historic areas. If you file a claim any way, make sure that the exterior of the building is maintained as it is, without any changes.
- The clothing and household items that you donate should be in good condition, or else you cannot claim any deduction.
- If a qualified conservation contribution is being made, make sure that the organization that the donation is being made to is in a good financial condition to maintain the property.
- While figuring out your charitable contribution, consider capital gain property. This is the property that can result in a long term financial gain, if sold on the donation date (at the FMV, of course).
- If this property is donated to private foundations, the FMV has to be reduced by the appreciation amount.
Remember this―the submission of Form 8283 does not mean that your entire property value will be deducted for that year. Your annual gross income is taken into consideration, i.e., your combined annual deduction is restricted to 50 percent of your adjusted gross income. So, if your deductions are lesser for the current year, you can claim the excess in the next tax return.