For individuals who make noncash charitable donations during a given tax year, the IRS offers tax deductions for qualified gifts.
What is Form 8283?
When taxpayers make qualified noncash donations to IRS-accepted charitable donations, they may qualify for a tax deduction. A qualified charitable tax deduction could reduce the taxpayer’s (donor’s) taxable income on their tax return information. A lower taxable income may mean that the taxpayer owes less in taxes during the given tax year. If the party donating wishes to have their noncash donation item deducted on their taxes, they will need to file IRS Form 8283.
Who Should File Form 8283?
Form 8283 is filed by individuals, corporations, and partnerships to report their noncash contributions during the tax year. Whether or not you need to file Form 8283 depends on which of these categories you fall into as well as the value of your contribution.
Taxpayers in the following circumstances must use Form 8283 to declare their tax deductible donations:
- Individuals who have contributed $500 or more in noncash donations
- C corporations who have contributed $5,000 or more in noncash donations
- Partnerships and S corporations who have contributed $5,000 or more in noncash donations
Determining Fair Market Value for Your Donation
Because your donation is not monetary, the item(s) must be appraised at fair market value (FMV). The IRS defines FMV as “….the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.”
So how do you determine the FMV of your charitable contribution? Charities are prohibited from assigning value to donations, so identifying how much your donation is worth is a little more complicated than taxpayers may think. Many organizations like Goodwill, provide value guidelines to help you determine what your donated property is worth. With this information and with the help of a professional tax advisor, you can evaluate whether or not you need to (or may benefit from) filing Form 8283.
Acceptable Uses for Form 8283:
Noncash donations are one of the most common tax deductions available to taxpayers—but not every donation counts for deductions on your tax return. In order to qualify for a tax deduction with a noncash donation, your donation must meet some IRS requirements.
In order to be eligible for a deduction, your donation must meet the following:
- Select one of the accepted IRS charities to donate to
- Donation must not be a cash, check, credit, or debit donation
- Deductions are collectively worth over $500
- Proper documentation and appraisals must be kept for the donated item(s)
Unacceptable Uses for Form 8283:
- Noncash donations worth less than $500
- Cash, check, credit, or debit donations
- Figuring the amount of your deduction
- Reporting out-of-pocket expenses for volunteer work
Form 8283 Instructions
After you’ve determined that you should file for a noncash charitable tax deduction, you’ll need to follow the IRS instructions to file Form 8283.
1. Download Form
Download Official IRS Form 8283 directly from the IRS website.
2. Determine Which Sections You Need to Complete
Depending on the size of your donation, as well as the type of property donated, you may need to fill out either Section A, B, or both.
- To claim a deduction of $5,000 or less, or to report donations of publicly traded securities, use Section A
- To claim a deduction over $5,000, use Section B
Form 8283 Section A Instructions
For Section A, Part I, only include the following information:
- Items or groups of similar items (like coin collections, jewelry, or paintings) for which you claimed a deduction of $5,000 or less per item, or for the group of similar items.
- The following publicly traded securities even is the claimed deduction exceeds $5,000:
- Securities listed on an exchange where the quotations are published daily
- Securities regularly traded in national or regional available markets for which published quotations are available
- Securities that are shares of a mutual fund for which quotations are published daily via newspaper or general circulation in the United States
For Section A, Part II, complete lines 2a through 2e if you contributed less than the entire interest in the donated property, and claimed a deduction of $5,000 or less. A partial interest gift is a donation of your personal property in which you place restrictions for the charitable organization’s use of the donated property. For example, if you donate a portion of your real estate property for an organization’s use, this is considered a partial interest gift.
For Section A, Part II, complete lines 3a through 3c only if you have placed restrictions on the use, right to income, or disposition of the donated property. The IRS uses donated furniture that can only be used in the reading room of an organization’s location as an example of restricted use. If this section applies, the donor must include a statement detailing the restricted use agreement for the donated property.
Form 8283 Section B Instructions
For Section B, only include items for which you claimed a deduction greater than $5,000—do not include the publicly traded securities that are reportable in Section A. Items reported in Section B generally require a written appraisal from a qualified appraiser to be filed with Form 8283. If you have made multiple donations valued over $5,000, you will need to complete a separate Form 8283 for each item donated, and each donee organization.
For Section B, Part I, the donating party must include a written appraisal from a qualified appraiser. Exceptions to the appraisal rule include donations of: intellectual property, a vehicle if the deduction for the vehicle is limited to the proceeds from its sale, non publicly traded stock of $10,000 or less, and clothing or household items not in good use condition. If you are unsure whether your donated item requires an appraisal, be sure to ask a tax professional before moving forward with Form 8283.
For Section B, Part II, the taxpayer (donor) will need to sign, declaring that the information regarding the appraised items is accurate.
For Section B, Part III, the qualified appraiser will need to sign declaring that they are not the donor, nor employed by any associated parties, and that the item appraisal is accurate.
Section B, Part IV should be completed by the charitable organization.
Takeaways: Filing Form 8283
Failure to properly file Form 8283 could result in unapproved deductions, which could end up costing you more in taxes during the given tax year. Community Tax experts are ready to help you file, and get the most out of your deductions this tax season with our assortment of tax preparation and filing services.