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1040 Ez File

1040 ez file Internal Revenue Bulletin:  2009-17  April 27, 2009  Rev. 1040 ez file Proc. 1040 ez file 2009-24 Table of Contents SECTION 1. 1040 ez file PURPOSE SECTION 2. 1040 ez file BACKGROUND SECTION 3. 1040 ez file SCOPE SECTION 4. 1040 ez file APPLICATION. 1040 ez file 01 In General. 1040 ez file . 1040 ez file 02 Limitations on Depreciation Deductions for Certain Automobiles. 1040 ez file . 1040 ez file 03 Inclusions in Income of Lessees of Passenger Automobiles. 1040 ez file SECTION 5. 1040 ez file EFFECTIVE DATE SECTION 6. 1040 ez file DRAFTING INFORMATION SECTION 1. 1040 ez file PURPOSE . 1040 ez file 01 This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2009, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2009, including a separate table of inclusion amounts for lessees of trucks and vans. 1040 ez file . 1040 ez file 02 The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. 1040 ez file SECTION 2. 1040 ez file BACKGROUND . 1040 ez file 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. 1040 ez file Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. 1040 ez file The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. 1040 ez file This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. 1040 ez file . 1040 ez file 02 Section 168(k)(1)(A) provides a 50 percent additional first year depreciation deduction for certain new property acquired by a taxpayer after December 31, 2007, and before January 1, 2010, if no written binding contract for the acquisition of the property existed before January 1, 2008. 1040 ez file Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50 percent additional first year depreciation deduction applies. 1040 ez file . 1040 ez file 03 Section 168(k)(2)(D)(i) provides that the 50 percent additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). 1040 ez file Section 168(k)(2)(D)(iii) permits a taxpayer to elect to not claim the 50 percent additional first year depreciation deduction for any class of property. 1040 ez file Section 168(k)(4) permits a corporation to elect to not claim the 50 percent additional first year depreciation deduction for all eligible qualified property (that is extension property or that is not extension property, as applicable) and instead to increase the business credit limitation under § 38(c) or the alternative minimum tax credit limitation under § 53(c). 1040 ez file Accordingly, this revenue procedure provides tables for passenger automobiles for which the 50 percent additional depreciation deduction applies and tables for passenger automobiles for which the 50 percent additional first year depreciation deduction does not apply, including passenger automobiles in a class of property for which the taxpayer “elects out” of the 50 percent additional first year depreciation deduction or passenger automobiles that are eligible qualified property to which the § 168(k)(4) election applies. 1040 ez file . 1040 ez file 04 For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. 1040 ez file The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. 1040 ez file Under § 1. 1040 ez file 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. 1040 ez file One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. 1040 ez file Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. 1040 ez file SECTION 3. 1040 ez file SCOPE . 1040 ez file 01 The limitations on depreciation deductions in section 4. 1040 ez file 02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2009, and continue to apply for each taxable year that the passenger automobile remains in service. 1040 ez file . 1040 ez file 02 The tables in section 4. 1040 ez file 03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2009. 1040 ez file Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. 1040 ez file See Rev. 1040 ez file Proc. 1040 ez file 2002-14, 2002-1 C. 1040 ez file B. 1040 ez file 450, for passenger automobiles first leased before January 1, 2003, Rev. 1040 ez file Proc. 1040 ez file 2003-75, 2003-2 C. 1040 ez file B. 1040 ez file 1018, for passenger automobiles first leased during calendar year 2003, Rev. 1040 ez file Proc. 1040 ez file 2004-20, 2004-1 C. 1040 ez file B. 1040 ez file 642, for passenger automobiles first leased during calendar year 2004, Rev. 1040 ez file Proc. 1040 ez file 2005-13, 2005-1 C. 1040 ez file B. 1040 ez file 759, for passenger automobiles first leased during calendar year 2005, Rev. 1040 ez file Proc. 1040 ez file 2006-18, 2006-1 C. 1040 ez file B. 1040 ez file 645, for passenger automobiles first leased during calendar year 2006, Rev. 1040 ez file Proc. 1040 ez file 2007-30, 2007-1 C. 1040 ez file B. 1040 ez file 1104, for passenger automobiles first leased during calendar year 2007, and Rev. 1040 ez file Proc. 1040 ez file 2008-22, 2008-12 I. 1040 ez file R. 1040 ez file B. 1040 ez file 658, for passenger automobiles first leased during calendar year 2008. 1040 ez file SECTION 4. 1040 ez file APPLICATION . 1040 ez file 01 In General. 1040 ez file (1) Limitations on depreciation deductions for certain automobiles. 1040 ez file The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2009 are in Tables 1 through 4 in section 4. 1040 ez file 02(2) of this revenue procedure. 1040 ez file (2) Inclusions in income of lessees of passenger automobiles. 1040 ez file A taxpayer first leasing a passenger automobile during calendar year 2009 must determine the inclusion amount that is added to gross income using Tables 5 and 6 in section 4. 1040 ez file 03 of this revenue procedure. 1040 ez file In addition, the taxpayer must follow the procedures of § 1. 1040 ez file 280F-7(a). 1040 ez file . 1040 ez file 02 Limitations on Depreciation Deductions for Certain Automobiles. 1040 ez file (1) Amount of the inflation adjustment. 1040 ez file (a) Passenger automobiles (other than trucks or vans). 1040 ez file Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. 1040 ez file The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. 1040 ez file The new car component of the CPI was 115. 1040 ez file 2 for October 1987 and 134. 1040 ez file 837 for October 2008. 1040 ez file The October 2008 index exceeded the October 1987 index by 19. 1040 ez file 637. 1040 ez file The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2009 for passenger automobiles (other than trucks and vans) is 17. 1040 ez file 05 percent (19. 1040 ez file 637/115. 1040 ez file 2 x 100%). 1040 ez file This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2009. 1040 ez file The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. 1040 ez file 1705, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2009. 1040 ez file (b) Trucks and vans. 1040 ez file To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2009, the new truck component of the CPI is used instead of the new car component. 1040 ez file The new truck component of the CPI was 112. 1040 ez file 4 for October 1987 and 133. 1040 ez file 640 for October 2008. 1040 ez file The October 2008 index exceeded the October 1987 index by 21. 1040 ez file 24. 1040 ez file The Service has, therefore, determined that the automobile price inflation adjustment for 2009 for trucks and vans is 18. 1040 ez file 90 percent (21. 1040 ez file 24/112. 1040 ez file 4 x 100%). 1040 ez file This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2009. 1040 ez file The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. 1040 ez file 1890, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans. 1040 ez file (2) Amount of the limitation. 1040 ez file For passenger automobiles placed in service by the taxpayer in calendar year 2009, Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year. 1040 ez file Use Table 1 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a passenger automobile that is eligible qualified property to which the § 168(k)(4) election applies. 1040 ez file Use Table 2 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. 1040 ez file Use Table 3 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a truck or van that is eligible qualified property to which the § 168(k)(4) election applies. 1040 ez file Use Table 4 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. 1040 ez file REV. 1040 ez file PROC. 1040 ez file 2009-24 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $2,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. 1040 ez file PROC. 1040 ez file 2009-24 TABLE 2 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $10,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. 1040 ez file PROC. 1040 ez file 2009-24 TABLE 3 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. 1040 ez file PROC. 1040 ez file 2009-24 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 . 1040 ez file 03 Inclusions in Income of Lessees of Passenger Automobiles. 1040 ez file The inclusion amounts for passenger automobiles first leased in calendar year 2009 are calculated under the procedures described in § 1. 1040 ez file 280F-7(a). 1040 ez file Lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 6 of this revenue procedure. 1040 ez file REV. 1040 ez file PROC. 1040 ez file 2009-24 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 9 19 28 34 38 19,000 19,500 10 21 32 38 43 19,500 20,000 11 24 36 42 48 20,000 20,500 12 27 39 46 54 20,500 21,000 13 29 43 51 58 21,000 21,500 15 31 47 55 64 21,500 22,000 16 34 50 60 68 22,000 23,000 17 38 56 66 76 23,000 24,000 20 42 64 75 86 24,000 25,000 22 47 71 84 96 25,000 26,000 24 52 78 93 107 26,000 27,000 26 58 85 101 117 27,000 28,000 29 62 93 110 127 28,000 29,000 31 67 100 119 138 29,000 30,000 33 72 108 128 147 30,000 31,000 35 77 115 137 157 31,000 32,000 38 82 122 146 167 32,000 33,000 40 87 129 155 178 33,000 34,000 42 92 137 163 188 34,000 35,000 44 97 144 172 199 35,000 36,000 47 102 151 181 208 36,000 37,000 49 107 159 189 219 37,000 38,000 51 112 166 199 228 38,000 39,000 53 117 173 208 239 39,000 40,000 56 122 180 216 250 40,000 41,000 58 127 188 225 259 41,000 42,000 60 132 195 234 269 42,000 43,000 62 137 203 242 280 43,000 44,000 65 141 210 252 290 44,000 45,000 67 146 218 260 300 45,000 46,000 69 151 225 269 311 46,000 47,000 71 157 232 278 320 47,000 48,000 74 161 240 286 331 48,000 49,000 76 166 247 296 340 49,000 50,000 78 171 255 304 351 50,000 51,000 80 176 262 313 361 51,000 52,000 83 181 269 322 371 52,000 53,000 85 186 276 331 381 53,000 54,000 87 191 284 339 392 54,000 55,000 89 196 291 349 401 55,000 56,000 92 201 298 357 412 56,000 57,000 94 206 306 365 423 57,000 58,000 96 211 313 375 432 58,000 59,000 98 216 320 384 442 59,000 60,000 101 221 327 393 452 60,000 62,000 104 228 339 406 467 62,000 64,000 109 238 353 424 488 64,000 66,000 113 248 368 441 509 66,000 68,000 118 258 382 459 529 68,000 70,000 122 268 397 476 550 70,000 72,000 127 277 413 493 570 72,000 74,000 131 288 427 511 590 74,000 76,000 136 297 442 529 610 76,000 78,000 140 307 457 546 631 78,000 80,000 145 317 471 564 651 80,000 85,000 152 335 497 595 686 85,000 90,000 164 359 534 639 737 90,000 95,000 175 384 570 683 789 95,000 100,000 186 409 607 727 839 100,000 110,000 203 446 662 793 916 110,000 120,000 226 495 736 881 1,018 120,000 130,000 248 545 809 970 1,119 130,000 140,000 271 594 883 1,058 1,220 140,000 150,000 293 644 956 1,146 1,322 150,000 160,000 316 693 1,030 1,234 1,424 160,000 170,000 338 743 1,103 1,322 1,526 170,000 180,000 361 792 1,177 1,410 1,628 180,000 190,000 383 842 1,250 1,498 1,730 190,000 200,000 406 891 1,324 1,586 1,831 200,000 210,000 428 941 1,397 1,675 1,932 210,000 220,000 451 990 1,471 1,762 2,035 220,000 230,000 473 1,040 1,544 1,851 2,136 230,000 240,000 496 1,089 1,618 1,939 2,238 240,000 And up 518 1,139 1,691 2,027 2,340 REV. 1040 ez file PROC. 1040 ez file 2009-24 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Electric Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th and Later $18,500 $19,000 8 17 25 30 35 19,000 19,500 9 19 29 35 40 19,500 20,000 10 22 33 38 45 20,000 20,500 11 25 36 43 50 20,500 21,000 12 27 40 48 55 21,000 21,500 13 30 43 52 60 21,500 22,000 15 32 47 56 66 22,000 23,000 16 36 52 64 72 23,000 24,000 18 41 60 72 83 24,000 25,000 21 45 68 81 93 25,000 26,000 23 50 75 90 103 26,000 27,000 25 56 82 98 114 27,000 28,000 27 61 89 107 124 28,000 29,000 30 65 97 116 134 29,000 30,000 32 70 104 125 144 30,000 31,000 34 75 112 134 154 31,000 32,000 36 80 119 143 164 32,000 33,000 39 85 126 151 175 33,000 34,000 41 90 134 160 184 34,000 35,000 43 95 141 169 195 35,000 36,000 45 100 148 178 205 36,000 37,000 48 105 155 187 215 37,000 38,000 50 110 163 195 226 38,000 39,000 52 115 170 204 236 39,000 40,000 55 120 177 213 246 40,000 41,000 57 125 185 221 256 41,000 42,000 59 130 192 231 266 42,000 43,000 61 135 199 240 276 43,000 44,000 64 139 207 249 286 44,000 45,000 66 144 215 257 296 45,000 46,000 68 149 222 266 307 46,000 47,000 70 155 229 274 317 47,000 48,000 73 159 237 283 327 48,000 49,000 75 164 244 292 338 49,000 50,000 77 169 251 301 348 50,000 51,000 79 174 259 310 357 51,000 52,000 82 179 266 318 368 52,000 53,000 84 184 273 328 378 53,000 54,000 86 189 281 336 388 54,000 55,000 88 194 288 345 399 55,000 56,000 91 199 295 354 408 56,000 57,000 93 204 302 363 419 57,000 58,000 95 209 310 371 429 58,000 59,000 97 214 317 381 439 59,000 60,000 100 219 324 389 450 60,000 62,000 103 226 336 402 465 62,000 64,000 107 236 351 420 485 64,000 66,000 112 246 365 438 505 66,000 68,000 116 256 380 455 526 68,000 70,000 121 266 394 473 546 70,000 72,000 125 276 409 491 566 72,000 74,000 130 286 423 509 586 74,000 76,000 134 296 438 526 607 76,000 78,000 139 305 454 543 627 78,000 80,000 143 316 467 561 648 80,000 85,000 151 333 493 592 684 85,000 90,000 163 357 531 635 735 90,000 95,000 174 382 567 680 785 95,000 100,000 185 407 604 724 836 100,000 110,000 202 444 659 790 912 110,000 120,000 225 493 733 878 1,014 120,000 130,000 247 543 806 966 1,116 130,000 140,000 270 592 880 1,054 1,218 140,000 150,000 292 642 953 1,143 1,319 150,000 160,000 315 691 1,027 1,230 1,421 160,000 170,000 337 741 1,100 1,319 1,522 170,000 180,000 360 790 1,174 1,407 1,624 180,000 190,000 382 840 1,247 1,495 1,726 190,000 200,000 405 889 1,321 1,583 1,828 200,000 210,000 427 939 1,394 1,671 1,930 210,000 220,000 450 988 1,468 1,759 2,031 220,000 230,000 472 1,038 1,541 1,847 2,134 230,000 240,000 495 1,087 1,615 1,935 2,235 240,000 and up 517 1,137 1,688 2,024 2,336 SECTION 5. 1040 ez file EFFECTIVE DATE This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by a taxpayer during calendar year 2009, and to leased passenger automobiles that are first leased by a taxpayer during calendar year 2009. 1040 ez file SECTION 6. 1040 ez file DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. 1040 ez file Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). 1040 ez file For further information regarding this revenue procedure, contact Mr. 1040 ez file Harvey at (202) 622-4930 (not a toll-free call). 1040 ez file Prev  Up  Next   Home   More Internal Revenue Bulletins
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IRS Releases the “Dirty Dozen” Tax Scams for 2014; Identity Theft, Phone Scams Lead List

IR-2014-16, Feb. 19, 2014

WASHINGTON — The Internal Revenue Service today issued its annual “Dirty Dozen” list of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

"Taxpayers should be on the lookout for tax scams using the IRS name,” said IRS Commissioner John Koskinen. “These schemes jump every year at tax time. Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.

The following are the Dirty Dozen tax scams for 2014:

Identity Theft

Tax fraud through the use of identity theft tops this year’s Dirty Dozen list. Identity theft occurs when someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.

The agency’s work on identity theft and refund fraud continues to grow, touching nearly every part of the organization. For the 2014 filing season, the IRS has expanded these efforts to better protect taxpayers and help victims.

The IRS has a special section on IRS.gov dedicated to identity theft issues, including YouTube videos, tips for taxpayers and an assistance guide. For victims, the information includes how to contact the IRS Identity Protection Specialized Unit. For other taxpayers, there are tips on how taxpayers can protect themselves against identity theft.

Taxpayers who believe they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. Taxpayers can call the IRS Identity Protection Specialized Unit at 800-908-4490. More information can be found on the special identity protection page.

Pervasive Telephone Scams

The IRS has seen a recent increase in local phone scams across the country, with callers pretending to be from the IRS in hopes of stealing money or identities from victims.

These phone scams include many variations, ranging from instances from where callers say the victims owe money or are entitled to a huge refund. Some calls can threaten arrest and threaten a driver’s license revocation. Sometimes these calls are paired with follow-up calls from people saying they are from the local police department or the state motor vehicle department.

Characteristics of these scams can include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers “spoof” or imitate the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.

After threatening victims with jail time or a driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

In another variation, one sophisticated phone scam has targeted taxpayers, including recent immigrants, throughout the country. Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do: If you know you owe taxes or you think you might owe taxes, call the IRS at 800-829-1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.

If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.

If you’ve been targeted by these scams, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov.  Please add "IRS Telephone Scam" to the comments of your complaint.

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information online that can help you protect yourself from email scams.

False Promises of “Free Money” from Inflated Refunds

Scam artists routinely pose as tax preparers during tax time, luring victims in by promising large federal tax refunds or refunds that people never dreamed they were due in the first place.

Scam artists use flyers, advertisements, phony store fronts and even word of mouth to throw out a wide net for victims. They may even spread the word through community groups or churches where trust is high. Scammers prey on people who do not have a filing requirement, such as low-income individuals or the elderly. They also prey on non-English speakers, who may or may not have a filing requirement.

Scammers build false hope by duping people into making claims for fictitious rebates, benefits or tax credits. They charge good money for very bad advice. Or worse, they file a false return in a person's name and that person never knows that a refund was paid.

Scam artists also victimize people with a filing requirement and due a refund by promising inflated refunds based on fictitious Social Security benefits and false claims for education credits, the Earned Income Tax Credit (EITC), or the American Opportunity Tax Credit, among others.

The IRS sometimes hears about scams from victims complaining about losing their federal benefits, such as Social Security benefits, certain veteran’s benefits or low-income housing benefits. The loss of benefits was the result of false claims being filed with the IRS that provided false income amounts.

While honest tax preparers provide their customers a copy of the tax return they’ve prepared, victims of scam frequently are not given a copy of what was filed. Victims also report that the fraudulent refund is deposited into the scammer’s bank account. The scammers deduct a large “fee” before cutting a check to the victim, a practice not used by legitimate tax preparers.

The IRS reminds all taxpayers that they are legally responsible for what’s on their returns even if it was prepared by someone else. Taxpayers who buy into such schemes can end up being penalized for filing false claims or receiving fraudulent refunds.

Taxpayers should take care when choosing an individual or firm to prepare their taxes. Honest return preparers generally: ask for proof of income and eligibility for credits and deductions; sign returns as the preparer; enter their IRS Preparer Tax Identification Number (PTIN); provide the taxpayer a copy of the return.

Beware: Intentional mistakes of this kind can result in a $5,000 penalty.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare their tax returns. Most return preparers provide honest service to their clients. But, some unscrupulous preparers prey on unsuspecting taxpayers, and the result can be refund fraud or identity theft.

It is important to choose carefully when hiring an individual or firm to prepare your return. This year, the IRS wants to remind all taxpayers that they should use only preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs).

The IRS also has a web page to assist taxpayers. For tips about choosing a preparer, details on preparer qualifications and information on how and when to make a complaint, view IRS Fact Sheet 2014-5, IRS Offers Advice on How to Choose a Tax Preparer.

Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. Make sure the preparer you hire is up to the task.

IRS.gov has general information on reporting tax fraud. More specifically, you report abusive tax preparers to the IRS on Form 14157, Complaint: Tax Return Preparer. Download Form 14157 and fill it out or order by mail at 800-TAX FORM (800-829-3676). The form includes a return address.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS works on a wide range of international tax issues with DOJ to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.

The IRS has collected billions of dollars in back taxes, interest and penalties so far from people who participated in offshore voluntary disclosure programs since 2009. It is in the best long-term interest of taxpayers to come forward, catch up on their filing requirements and pay their fair share.

Impersonation of Charitable Organizations

Another long-standing type of abuse or fraud is scams that occur in the wake of significant natural disasters.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims. The IRS cautions both victims of natural disasters and people wishing to make charitable donations to avoid scam artists by following these tips:

  • To help disaster victims, donate to recognized charities.
  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible.
  • Don’t give out personal financial information, such as Social Security numbers or credit card and bank account numbers and passwords, to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Call the IRS toll-free disaster assistance telephone number (866-562-5227) if you are a disaster victim with specific questions about tax relief or disaster related tax issues.

False Income, Expenses or Exemptions

Another scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income in order to maximize refundable credits. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution.

Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit although they were not eligible. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes.

Those who promote or adopt frivolous positions risk a variety of penalties.  For example, taxpayers could be responsible for an accuracy-related penalty, a civil fraud penalty, an erroneous refund claim penalty, or a failure to file penalty.  The Tax Court may also impose a penalty against taxpayers who make frivolous arguments in court.   

Taxpayers who rely on frivolous arguments and schemes may also face criminal prosecution for attempting to evade or defeat tax. Similarly, taxpayers may be convicted of a felony for willfully making and signing under penalties of perjury any return, statement, or other document that the person does not believe to be true and correct as to every material matter.  Persons who promote frivolous arguments and those who assist taxpayers in claiming tax benefits based on frivolous arguments may be prosecuted for a criminal felony.

Falsely Claiming Zero Wages or Using False Form 1099

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

Some people also attempt fraud using false Form 1099 refund claims. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS. In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return.

Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

Abusive Tax Structures

Abusive tax schemes have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions.

IRS Criminal Investigation (CI) has developed a nationally coordinated program to combat these abusive tax schemes. CI's primary focus is on the identification and investigation of the tax scheme promoters as well as those who play a substantial or integral role in facilitating, aiding, assisting, or furthering the abusive tax scheme (e.g., accountants, lawyers).  Secondarily, but equally important, is the investigation of investors who knowingly participate in abusive tax schemes.

What is an abusive scheme? The Abusive Tax Schemes program encompasses violations of the Internal Revenue Code (IRC) and related statutes where multiple flow-through entities are used as an integral part of the taxpayer's scheme to evade taxes.  These schemes are characterized by the use of Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs), International Business Companies (IBCs), foreign financial accounts, offshore credit/debit cards and other similar instruments.  The schemes are usually complex involving multi-layer transactions for the purpose of concealing the true nature and ownership of the taxable income and/or assets.

Form over substance are the most important words to remember before buying into any arrangements that promise to "eliminate" or "substantially reduce" your tax liability.  The promoters of abusive tax schemes often employ financial instruments in their schemes.  However, the instruments are used for improper purposes including the facilitation of tax evasion.

The IRS encourages taxpayers to report unlawful tax evasion. Where Do You Report Suspected Tax Fraud Activity?

Misuse of Trusts

Trusts also commonly show up in abusive tax structures. They are highlighted here because unscrupulous promoters continue to urge taxpayers to transfer large amounts of assets into trusts. These assets include not only cash and investments, but also successful on-going businesses. There are legitimate uses of trusts in tax and estate planning, but the IRS commonly sees highly questionable transactions. These transactions promise reduced taxable income, inflated deductions for personal expenses, the reduction or elimination of self-employment taxes and reduced estate or gift transfer taxes. These transactions commonly arise when taxpayers are transferring wealth from one generation to another. Questionable trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.

IRS personnel continue to see an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses, as well as to avoid estate transfer taxes. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.

The IRS reminds taxpayers that tax scams can take many forms beyond the “Dirty Dozen,” and people should be on the lookout for many other schemes. More information on tax scams is available at IRS.gov.

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Page Last Reviewed or Updated: 21-Feb-2014

The 1040 Ez File

1040 ez file 24. 1040 ez file   Contributions Table of Contents Introduction Useful Items - You may want to see: Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions of PropertyException. 1040 ez file Household items. 1040 ez file Deduction more than $500. 1040 ez file Form 1098-C. 1040 ez file Filing deadline approaching and still no Form 1098-C. 1040 ez file Exception 1—vehicle used or improved by organization. 1040 ez file Exception 2—vehicle given or sold to needy individual. 1040 ez file Deduction $500 or less. 1040 ez file Right to use property. 1040 ez file Tangible personal property. 1040 ez file Future interest. 1040 ez file Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value When To DeductChecks. 1040 ez file Text message. 1040 ez file Credit card. 1040 ez file Pay-by-phone account. 1040 ez file Stock certificate. 1040 ez file Promissory note. 1040 ez file Option. 1040 ez file Borrowed funds. 1040 ez file Limits on DeductionsCarryovers Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To Report Introduction This chapter explains how to claim a deduction for your charitable contributions. 1040 ez file It discusses the following topics. 1040 ez file The types of organizations to which you can make deductible charitable contributions. 1040 ez file The types of contributions you can deduct. 1040 ez file How much you can deduct. 1040 ez file What records you must keep. 1040 ez file How to report your charitable contributions. 1040 ez file A charitable contribution is a donation or gift to, or for the use of, a qualified organization. 1040 ez file It is voluntary and is made without getting, or expecting to get, anything of equal value. 1040 ez file Form 1040 required. 1040 ez file    To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. 1040 ez file The amount of your deduction may be limited if certain rules and limits explained in this chapter apply to you. 1040 ez file The limits are explained in detail in Publication 526. 1040 ez file Useful Items - You may want to see: Publication 526 Charitable Contributions 561 Determining the Value of Donated Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 8283 Noncash Charitable Contributions Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. 1040 ez file Most organizations other than churches and governments must apply to the IRS to become a qualified organization. 1040 ez file How to check whether an organization can receive deductible charitable contributions. 1040 ez file   You can ask any organization whether it is a qualified organization, and most will be able to tell you. 1040 ez file Or go to IRS. 1040 ez file gov. 1040 ez file Click on “Tools” and then on “Exempt Organizations Select Check” (www. 1040 ez file irs. 1040 ez file gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). 1040 ez file This online tool will enable you to search for qualified organizations. 1040 ez file You can also call the IRS to find out if an organization is qualified. 1040 ez file Call 1-877-829-5500. 1040 ez file People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. 1040 ez file Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. 1040 ez file gsa. 1040 ez file gov/fedrelay. 1040 ez file Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. 1040 ez file A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). 1040 ez file It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. 1040 ez file Certain organizations that foster national or international amateur sports competition also qualify. 1040 ez file War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). 1040 ez file Domestic fraternal societies, orders, and associations operating under the lodge system. 1040 ez file (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. 1040 ez file ) Certain nonprofit cemetery companies or corporations. 1040 ez file (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. 1040 ez file ) The United States or any state, the District of Columbia, a U. 1040 ez file S. 1040 ez file possession (including Puerto Rico), a political subdivision of a state or U. 1040 ez file S. 1040 ez file possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. 1040 ez file (Your contribution to this type of organization is only deductible if it is to be used solely for public purposes. 1040 ez file ) Examples. 1040 ez file    The following list gives some examples of qualified organizations. 1040 ez file Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. 1040 ez file Most nonprofit charitable organizations such as the American Red Cross and the United Way. 1040 ez file Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. 1040 ez file This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. 1040 ez file However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . 1040 ez file Nonprofit hospitals and medical research organizations. 1040 ez file Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. 1040 ez file Nonprofit volunteer fire companies. 1040 ez file Nonprofit organizations that develop and maintain public parks and recreation facilities. 1040 ez file Civil defense organizations. 1040 ez file Certain foreign charitable organizations. 1040 ez file   Under income tax treaties with Canada, Israel, and Mexico, you may be able to deduct contributions to certain Canadian, Israeli, or Mexican charitable organizations. 1040 ez file Generally, you must have income from sources in that country. 1040 ez file For additional information on the deduction of contributions to Canadian charities, see Publication 597, Information on the United States–Canada Income Tax Treaty. 1040 ez file If you need more information on how to figure your contribution to Mexican and Israeli charities, see Publication 526. 1040 ez file Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. 1040 ez file A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. 1040 ez file The contributions must be made to a qualified organization and not set aside for use by a specific person. 1040 ez file If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. 1040 ez file See Contributions of Property , later in this chapter. 1040 ez file Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. 1040 ez file See Limits on Deductions , later. 1040 ez file In addition, the total of your charitable contribution deduction and certain other itemized deductions may be limited. 1040 ez file See chapter 29. 1040 ez file Table 24-1 gives examples of contributions you can and cannot deduct. 1040 ez file Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. 1040 ez file Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. 1040 ez file If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. 1040 ez file For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. 1040 ez file Example 1. 1040 ez file You pay $65 for a ticket to a dinner-dance at a church. 1040 ez file Your entire $65 payment goes to the church. 1040 ez file The ticket to the dinner-dance has a fair market value of $25. 1040 ez file When you buy your ticket, you know that its value is less than your payment. 1040 ez file To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). 1040 ez file You can deduct $40 as a contribution to the church. 1040 ez file Example 2. 1040 ez file At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. 1040 ez file The amount you pay is no more than the fair rental value. 1040 ez file You have not made a deductible charitable contribution. 1040 ez file Athletic events. 1040 ez file   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. 1040 ez file   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. 1040 ez file Subtract the price of the tickets from your payment. 1040 ez file You can deduct 80% of the remaining amount as a charitable contribution. 1040 ez file Example 1. 1040 ez file You pay $300 a year for membership in a university's athletic scholarship program. 1040 ez file The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. 1040 ez file You can deduct $240 (80% of $300) as a charitable contribution. 1040 ez file Table 24-1. 1040 ez file Examples of Charitable Contributions—A Quick Check Use the following lists for a quick check of whether you can deduct a contribution. 1040 ez file See the rest of this chapter for more information and additional rules and limits that may apply. 1040 ez file Deductible As  Charitable Contributions Not Deductible  As Charitable Contributions Money or property you give to:  Churches, synagogues, temples, mosques, and other religious organizations Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park) Nonprofit schools and hospitals The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc. 1040 ez file War veterans groups   Expenses paid for a student living with you, sponsored by a qualified organization  Out-of-pocket expenses when you serve a qualified organization as a volunteer Money or property you give to:  Civic leagues, social and sports clubs, labor unions, and chambers of commerce Foreign organizations (except certain Canadian, Israeli, and Mexican charities) Groups that are run for personal profit Groups whose purpose is to lobby for law changes Homeowners' associations Individuals Political groups or candidates for public office   Cost of raffle, bingo, or lottery tickets  Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups  Tuition  Value of your time or services  Value of blood given to a blood bank    Example 2. 1040 ez file The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. 1040 ez file You must subtract the usual price of a ticket ($120) from your $300 payment. 1040 ez file The result is $180. 1040 ez file Your deductible charitable contribution is $144 (80% of $180). 1040 ez file Charity benefit events. 1040 ez file   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. 1040 ez file   If there is an established charge for the event, that charge is the value of your benefit. 1040 ez file If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. 1040 ez file Whether you use the tickets or other privileges has no effect on the amount you can deduct. 1040 ez file However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. 1040 ez file    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. 1040 ez file If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. 1040 ez file Example. 1040 ez file You pay $40 to see a special showing of a movie for the benefit of a qualified organization. 1040 ez file Printed on the ticket is “Contribution—$40. 1040 ez file ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). 1040 ez file Membership fees or dues. 1040 ez file    You may be able to deduct membership fees or dues you pay to a qualified organization. 1040 ez file However, you can deduct only the amount that is more than the value of the benefits you receive. 1040 ez file    You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. 1040 ez file They are not qualified organizations. 1040 ez file Certain membership benefits can be disregarded. 1040 ez file   Both you and the organization can disregard the following membership benefits if you receive them in return for an annual payment of $75 or less. 1040 ez file Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. 1040 ez file Admission, while you are a member, to events open only to members of the organization, if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. 1040 ez file 20. 1040 ez file Token items. 1040 ez file   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. 1040 ez file You receive only a small item or other benefit of token value. 1040 ez file The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. 1040 ez file Written statement. 1040 ez file   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. 1040 ez file The statement must say that you can deduct only the amount of your payment that is more than the value of the goods or services you received. 1040 ez file It must also give you a good faith estimate of the value of those goods or services. 1040 ez file   The organization can give you the statement either when it solicits or when it receives the payment from you. 1040 ez file Exception. 1040 ez file   An organization will not have to give you this statement if one of the following is true. 1040 ez file The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. 1040 ez file You receive only items whose value is not substantial as described under Token items , earlier. 1040 ez file You receive only membership benefits that can be disregarded, as described earlier. 1040 ez file Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. 1040 ez file You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization as part of a program of the organization to provide educational opportunities for the student, Is not your relative or dependent, and Is a full-time student in the twelfth or any lower grade at a school in the United States. 1040 ez file You can deduct up to $50 a month for each full calendar month the student lives with you. 1040 ez file Any month when conditions (1) through (3) are met for 15 days or more counts as a full month. 1040 ez file For additional information, see Expenses Paid for Student Living With You in Publication 526. 1040 ez file Mutual exchange program. 1040 ez file   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. 1040 ez file Table 24-2. 1040 ez file Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. 1040 ez file All of the rules explained in this chapter also apply. 1040 ez file See, in particular, Out-of-Pocket Expenses in Giving Services . 1040 ez file Question Answer I volunteer 6 hours a week in the office of a qualified organization. 1040 ez file The receptionist is paid $10 an hour for the same work. 1040 ez file Can I deduct $60 a week for my time?    No, you cannot deduct the value of your time or services. 1040 ez file The office is 30 miles from my home. 1040 ez file Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. 1040 ez file If you don't want to figure your actual costs, you can deduct 14 cents for each mile. 1040 ez file I volunteer as a Red Cross nurse's aide at a hospital. 1040 ez file Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. 1040 ez file I pay a babysitter to watch my children while I volunteer for a qualified organization. 1040 ez file Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. 1040 ez file (If you have childcare expenses so you can work for pay, see chapter 32. 1040 ez file ) Out-of-Pocket Expenses in Giving Services Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. 1040 ez file The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. 1040 ez file Table 24-2 contains questions and answers that apply to some individuals who volunteer their services. 1040 ez file Conventions. 1040 ez file   If a qualified organization selects you to attend a convention as its representative, you can deduct unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight in connection with the convention. 1040 ez file However, see Travel , later. 1040 ez file   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. 1040 ez file You also cannot deduct transportation, meals and lodging, and other expenses for your spouse or children. 1040 ez file    You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. 1040 ez file You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. 1040 ez file Uniforms. 1040 ez file   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. 1040 ez file Foster parents. 1040 ez file   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. 1040 ez file A qualified organization must select the individuals you take into your home for foster care. 1040 ez file    You can deduct expenses that meet both of the following requirements. 1040 ez file They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. 1040 ez file They are incurred primarily to benefit the qualified organization. 1040 ez file   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. 1040 ez file For details, see chapter 3. 1040 ez file Example. 1040 ez file You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. 1040 ez file Your unreimbursed expenses are not deductible as charitable contributions. 1040 ez file Car expenses. 1040 ez file   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving services to a charitable organization. 1040 ez file You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. 1040 ez file    If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. 1040 ez file   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. 1040 ez file   You must keep reliable written records of your car expenses. 1040 ez file For more information, see Car expenses under Records To Keep, later. 1040 ez file Travel. 1040 ez file   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. 1040 ez file This applies whether you pay the expenses directly or indirectly. 1040 ez file You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. 1040 ez file   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. 1040 ez file Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. 1040 ez file However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. 1040 ez file Example 1. 1040 ez file You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. 1040 ez file You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. 1040 ez file You participate in the activities of the group and enjoy your time with them. 1040 ez file You oversee the breaking of camp and you transport the group home. 1040 ez file You can deduct your travel expenses. 1040 ez file Example 2. 1040 ez file You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. 1040 ez file The project is sponsored by a charitable organization. 1040 ez file In most circumstances, you cannot deduct your expenses. 1040 ez file Example 3. 1040 ez file You work for several hours each morning on an archaeological dig sponsored by a charitable organization. 1040 ez file The rest of the day is free for recreation and sightseeing. 1040 ez file You cannot take a charitable contribution deduction even though you work very hard during those few hours. 1040 ez file Example 4. 1040 ez file You spend the entire day attending a charitable organization's regional meeting as a chosen representative. 1040 ez file In the evening you go to the theater. 1040 ez file You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. 1040 ez file Daily allowance (per diem). 1040 ez file   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. 1040 ez file You may be able to deduct any necessary travel expenses that are more than the allowance. 1040 ez file Deductible travel expenses. 1040 ez file   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. 1040 ez file Because these travel expenses are not business-related, they are not subject to the same limits as business-related expenses. 1040 ez file For information on business travel expenses, see Travel Expenses in chapter 26. 1040 ez file Contributions You Cannot Deduct There are some contributions you cannot deduct, such as those made to specific individuals and those made to nonqualified organizations. 1040 ez file (See Contributions to Individuals and Contributions to Nonqualified Organizations , next. 1040 ez file ) There are others you can deduct only part of, as discussed later under Contributions From Which You Benefit . 1040 ez file Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. 1040 ez file Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members. 1040 ez file Contributions to individuals who are needy or worthy. 1040 ez file You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. 1040 ez file But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. 1040 ez file Example. 1040 ez file You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. 1040 ez file However, you cannot deduct contributions earmarked for relief of a particular individual or family. 1040 ez file Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. 1040 ez file Expenses you paid for another person who provided services to a qualified organization. 1040 ez file Example. 1040 ez file Your son does missionary work. 1040 ez file You pay his expenses. 1040 ez file You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. 1040 ez file Payments to a hospital that are for a specific patient's care or for services for a specific patient. 1040 ez file You cannot deduct these payments even if the hospital is operated by a city, a state, or other qualified organization. 1040 ez file Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. 1040 ez file Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. 1040 ez file Chambers of commerce and other business leagues or organizations (but see chapter 28). 1040 ez file Civic leagues and associations. 1040 ez file Communist organizations. 1040 ez file Country clubs and other social clubs. 1040 ez file Most foreign organizations (other than certain Canadian, Israeli, or Mexican charitable organizations). 1040 ez file For details, see Publication 526. 1040 ez file Homeowners' associations. 1040 ez file Labor unions (but see chapter 28). 1040 ez file Political organizations and candidates. 1040 ez file Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. 1040 ez file See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. 1040 ez file These contributions include the following. 1040 ez file Contributions for lobbying. 1040 ez file This includes amounts that you earmark for use in, or in connection with, influencing specific legislation. 1040 ez file Contributions to a retirement home for room, board, maintenance, or admittance. 1040 ez file Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. 1040 ez file Costs of raffles, bingo, lottery, etc. 1040 ez file You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. 1040 ez file For information on how to report gambling winnings and losses, see Gambling winnings in chapter 12 and Gambling Losses Up to the Amount of Gambling Winnings in chapter 28. 1040 ez file Dues to fraternal orders and similar groups. 1040 ez file However, see Membership fees or dues , earlier, under Contributions You Can Deduct. 1040 ez file Tuition, or amounts you pay instead of tuition. 1040 ez file You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. 1040 ez file You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. 1040 ez file ” Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. 1040 ez file Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. 1040 ez file The cost of meals you eat while you perform services for a qualified organization unless it is necessary for you to be away from home overnight while performing the services. 1040 ez file Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final (but see Adoption Credit in chapter 37, and the instructions for Form 8839, Qualified Adoption Expenses). 1040 ez file You also may be able to claim an exemption for the child. 1040 ez file See Adopted child in chapter 3. 1040 ez file Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property (but see chapter 28). 1040 ez file Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. 1040 ez file However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. 1040 ez file See Giving Property That Has Increased in Value , later. 1040 ez file For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. 1040 ez file Clothing and household items. 1040 ez file   You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. 1040 ez file Exception. 1040 ez file   You can take a deduction for a contribution of an item of clothing or household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. 1040 ez file Household items. 1040 ez file   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. 1040 ez file   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. 1040 ez file Cars, boats, and airplanes. 1040 ez file    The following rules apply to any donation of a qualified vehicle. 1040 ez file A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. 1040 ez file Deduction more than $500. 1040 ez file   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. 1040 ez file If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040 ez file Form 1098-C. 1040 ez file   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. 1040 ez file The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. 1040 ez file   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453 and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. 1040 ez file   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. 1040 ez file    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. 1040 ez file But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. 1040 ez file Filing deadline approaching and still no Form 1098-C. 1040 ez file   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. 1040 ez file Request an automatic 6-month extension of time to file your return. 1040 ez file You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. 1040 ez file S. 1040 ez file Individual Income Tax Return. 1040 ez file  For more information, see Automatic Extension in chapter 1. 1040 ez file File the return on time without claiming the deduction for the qualified vehicle. 1040 ez file After receiving the Form 1098-C, file an amended return, Form 1040X, claiming the deduction. 1040 ez file Attach Copy B of Form 1098-C (or other statement) to the amended return. 1040 ez file For more information about amended returns, see Amended Returns and Claims for Refund in chapter 1. 1040 ez file Exceptions. 1040 ez file   There are two exceptions to the rules just described for deductions of more than $500. 1040 ez file Exception 1—vehicle used or improved by organization. 1040 ez file   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. 1040 ez file But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040 ez file The Form 1098-C (or other statement) will show whether this exception applies. 1040 ez file Exception 2—vehicle given or sold to needy individual. 1040 ez file   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. 1040 ez file But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040 ez file The Form 1098-C (or other statement) will show whether this exception applies. 1040 ez file   This exception does not apply if the organization sells the vehicle at auction. 1040 ez file In that case, you cannot deduct the vehicle's fair market value. 1040 ez file Example. 1040 ez file Anita donates a used car to a qualified organization. 1040 ez file She bought it 3 years ago for $9,000. 1040 ez file A used car guide shows the fair market value for this type of car is $6,000. 1040 ez file However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. 1040 ez file Neither exception 1 nor exception 2 applies. 1040 ez file If Anita itemizes her deductions, she can deduct $2,900 for her donation. 1040 ez file She must attach Form 1098-C and Form 8283 to her return. 1040 ez file Deduction $500 or less. 1040 ez file   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. 1040 ez file But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040 ez file   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. 1040 ez file The statement must contain the information and meet the tests for an acknowledgment described under Deductions of At Least $250 But Not More Than $500 under Records To Keep, later. 1040 ez file Partial interest in property. 1040 ez file   Generally, you cannot deduct a charitable contribution of less than your entire interest in property. 1040 ez file Right to use property. 1040 ez file   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. 1040 ez file For exceptions and more information, see Partial Interest in Property Not in Trust in Publication 561. 1040 ez file Future interests in tangible personal property. 1040 ez file   You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. 1040 ez file Tangible personal property. 1040 ez file   This is any property, other than land or buildings, that can be seen or touched. 1040 ez file It includes furniture, books, jewelry, paintings, and cars. 1040 ez file Future interest. 1040 ez file   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. 1040 ez file Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. 1040 ez file Publication 561 contains a more complete discussion. 1040 ez file Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. 1040 ez file Used clothing and household items. 1040 ez file   The fair market value of used clothing and household goods is usually far less than what you paid for them when they were new. 1040 ez file   For used clothing, you should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. 1040 ez file See Household Goods in Publication 561 for information on the valuation of household goods, such as furniture, appliances, and linens. 1040 ez file Example. 1040 ez file Dawn Greene donated a coat to a thrift store operated by her church. 1040 ez file She paid $300 for the coat 3 years ago. 1040 ez file Similar coats in the thrift store sell for $50. 1040 ez file The fair market value of the coat is $50. 1040 ez file Dawn's donation is limited to $50. 1040 ez file Cars, boats, and airplanes. 1040 ez file   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. 1040 ez file Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. 1040 ez file The guides may be published monthly or seasonally and for different regions of the country. 1040 ez file These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. 1040 ez file The prices are not “official” and these publications are not considered an appraisal of any specific donated property. 1040 ez file But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. 1040 ez file   You can also find used car pricing information on the Internet. 1040 ez file Example. 1040 ez file You donate a used car in poor condition to a local high school for use by students studying car repair. 1040 ez file A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. 1040 ez file However, the guide shows the price for a private party sale of the car is only $750. 1040 ez file The fair market value of the car is considered to be $750. 1040 ez file Large quantities. 1040 ez file   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. 1040 ez file Giving Property That Has Decreased in Value If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. 1040 ez file You cannot claim a deduction for the difference between the property's basis and its fair market value. 1040 ez file Giving Property That Has Increased in Value If you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. 1040 ez file Your basis in property is generally what you paid for it. 1040 ez file See chapter 13 if you need more information about basis. 1040 ez file Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. 1040 ez file Ordinary income property. 1040 ez file   Property is ordinary income property if you would have recognized ordinary income or short-term capital gain had you sold it at fair market value on the date it was contributed. 1040 ez file Examples of ordinary income property are inventory, works of art created by the donor, manuscripts prepared by the donor, and capital assets (defined in chapter 14) held 1 year or less. 1040 ez file Amount of deduction. 1040 ez file   The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. 1040 ez file Generally, this rule limits the deduction to your basis in the property. 1040 ez file Example. 1040 ez file You donate stock you held for 5 months to your church. 1040 ez file The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). 1040 ez file Because the $200 of appreciation would be short-term capital gain if you sold the stock, your deduction is limited to $800 (fair market value minus the appreciation). 1040 ez file Capital gain property. 1040 ez file   Property is capital gain property if you would have recognized long-term capital gain had you sold it at fair market value on the date of the contribution. 1040 ez file It includes capital assets held more than 1 year, as well as certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. 1040 ez file Amount of deduction — general rule. 1040 ez file   When figuring your deduction for a contribution of capital gain property, you generally can use the fair market value of the property. 1040 ez file Exceptions. 1040 ez file   In certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. 1040 ez file Generally, this means reducing the fair market value to the property's cost or other basis. 1040 ez file Bargain sales. 1040 ez file   A bargain sale of property is a sale or exchange for less than the property's fair market value. 1040 ez file A bargain sale to a qualified organization is partly a charitable contribution and partly a sale or exchange. 1040 ez file A bargain sale may result in a taxable gain. 1040 ez file More information. 1040 ez file   For more information on donating appreciated property, see Giving Property That Has Increased in Value in Publication 526. 1040 ez file When To Deduct You can deduct your contributions only in the year you actually make them in cash or other property (or in a later carryover year, as explained later under Carryovers ). 1040 ez file This applies whether you use the cash or an accrual method of accounting. 1040 ez file Time of making contribution. 1040 ez file   Usually, you make a contribution at the time of its unconditional delivery. 1040 ez file Checks. 1040 ez file   A check you mail to a charity is considered delivered on the date you mail it. 1040 ez file Text message. 1040 ez file   Contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account. 1040 ez file Credit card. 1040 ez file    Contributions charged on your credit card are deductible in the year you make the charge. 1040 ez file Pay-by-phone account. 1040 ez file    Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount. 1040 ez file Stock certificate. 1040 ez file   A properly endorsed stock certificate is considered delivered on the date of mailing or other delivery to the charity or to the charity's agent. 1040 ez file However, if you give a stock certificate to your agent or to the issuing corporation for transfer to the name of the charity, your contribution is not delivered until the date the stock is transferred on the books of the corporation. 1040 ez file Promissory note. 1040 ez file   If you issue and deliver a promissory note to a charity as a contribution, it is not a contribution until you make the note payments. 1040 ez file Option. 1040 ez file    If you grant a charity an option to buy real property at a bargain price, it is not a contribution until the organization exercises the option. 1040 ez file Borrowed funds. 1040 ez file   If you contribute borrowed funds, you can deduct the contribution in the year you deliver the funds to the charity, regardless of when you repay the loan. 1040 ez file Limits on Deductions The amount you can deduct for charitable contributions cannot be more than 50% of your adjusted gross income (AGI). 1040 ez file Your deduction may be further limited to 30% or 20% of your AGI, depending on the type of property you give and the type of organization you give it to. 1040 ez file If your total contributions for the year are 20% or less of your AGI, these limits do not apply to you. 1040 ez file The limits are discussed in detail under Limits on Deductions in Publication 526. 1040 ez file A higher limit applies to certain qualified conservation contributions. 1040 ez file See Publication 526 for details. 1040 ez file Carryovers You can carry over any contributions you cannot deduct in the current year because they exceed your adjusted-gross-income limits. 1040 ez file You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time. 1040 ez file For more information, see Carryovers in Publication 526. 1040 ez file Records To Keep You must keep records to prove the amount of the contributions you make during the year. 1040 ez file The kind of records you must keep depends on the amount of your contributions and whether they are: Cash contributions, Noncash contributions, or Out-of-pocket expenses when donating your services. 1040 ez file Note. 1040 ez file An organization generally must give you a written statement if it receives a payment from you that is more than $75 and is partly a contribution and partly for goods or services. 1040 ez file (See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. 1040 ez file ) Keep the statement for your records. 1040 ez file It may satisfy all or part of the recordkeeping requirements explained in the following discussions. 1040 ez file Cash Contributions Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction. 1040 ez file You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following. 1040 ez file A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. 1040 ez file Bank records may include: A canceled check, A bank or credit union statement, or A credit card statement. 1040 ez file A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution. 1040 ez file The payroll deduction records described next. 1040 ez file Payroll deductions. 1040 ez file   If you make a contribution by payroll deduction, you must keep: A pay stub, Form W-2, or other document furnished by your employer that shows the date and amount of the contribution, and A pledge card or other document prepared by or for the qualified organization that shows the name of the organization. 1040 ez file If your employer withheld $250 or more from a single paycheck, see Contributions of $250 or More , next. 1040 ez file Contributions of $250 or More You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records. 1040 ez file If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions. 1040 ez file Amount of contribution. 1040 ez file   In figuring whether your contribution is $250 or more, do not combine separate contributions. 1040 ez file For example, if you gave your church $25 each week, your weekly payments do not have to be combined. 1040 ez file Each payment is a separate contribution. 1040 ez file   If contributions are made by payroll deduction, the deduction from each paycheck is treated as a separate contribution. 1040 ez file   If you made a payment that is partly for goods and services, as described earlier under Contributions From Which You Benefit , your contribution is the amount of the payment that is more than the value of the goods and services. 1040 ez file Acknowledgment. 1040 ez file   The acknowledgment must meet these tests. 1040 ez file It must be written. 1040 ez file It must include: The amount of cash you contributed, Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), A description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and A statement that the only benefit you received was an intangible religious benefit, if that was the case. 1040 ez file The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. 1040 ez file An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. 1040 ez file An example is admission to a religious ceremony. 1040 ez file You must get it on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. 1040 ez file   If the acknowledgment does not show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution. 1040 ez file If the acknowledgment shows the date of the contribution and meets the other tests just described, you do not need any other records. 1040 ez file Payroll deductions. 1040 ez file   If you make a contribution by payroll deduction and your employer withholds $250 or more from a single paycheck, you must keep: A pay stub, Form W-2, or other document furnished by your employer that shows the amount withheld as a contribution, and A pledge card or other document prepared by or for the qualified organization that shows the name of the organization and states the organization does not provide goods or services in return for any contribution made to it by payroll deduction. 1040 ez file A single pledge card may be kept for all contributions made by payroll deduction regardless of amount as long as it contains all the required information. 1040 ez file   If the pay stub, Form W-2, pledge card, or other document does not show the date of the contribution, you must have another document that does show the date of the contribution. 1040 ez file If the pay stub, Form W-2, pledge card, or other document shows the date of the contribution, you do not need any other records except those just described in (1) and (2). 1040 ez file Noncash Contributions For a contribution not made in cash, the records you must keep depend on whether your deduction for the contribution is: Less than $250, At least $250 but not more than $500, Over $500 but not more than $5,000, or Over $5,000. 1040 ez file Amount of deduction. 1040 ez file   In figuring whether your deduction is $500 or more, combine your claimed deductions for all similar items of property donated to any charitable organization during the year. 1040 ez file   If you received goods or services in return, as described earlier in Contributions From Which You Benefit , reduce your contribution by the value of those goods or services. 1040 ez file If you figure your deduction by reducing the fair market value of the donated property by its appreciation, as described earlier in Giving Property That Has Increased in Value , your contribution is the reduced amount. 1040 ez file Deductions of Less Than $250 If you make any noncash contribution, you must get and keep a receipt from the charitable organization showing: The name of the charitable organization, The date and location of the charitable contribution, and A reasonably detailed description of the property. 1040 ez file A letter or other written communication from the charitable organization acknowledging receipt of the contribution and containing the information in (1), (2), and (3) will serve as a receipt. 1040 ez file You are not required to have a receipt where it is impractical to get one (for example, if you leave property at a charity's unattended drop site). 1040 ez file Additional records. 1040 ez file   You must also keep reliable written records for each item of contributed property. 1040 ez file Your written records must include the following information. 1040 ez file The name and address of the organization to which you contributed. 1040 ez file The date and location of the contribution. 1040 ez file A description of the property in detail reasonable under the circumstances. 1040 ez file For a security, keep the name of the issuer, the type of security, and whether it is regularly traded on a stock exchange or in an over-the-counter market. 1040 ez file The fair market value of the property at the time of the contribution and how you figured the fair market value. 1040 ez file If it was determined by appraisal, keep a signed copy of the appraisal. 1040 ez file The cost or other basis of the property, if you must reduce its fair market value by appreciation. 1040 ez file Your records should also include the amount of the reduction and how you figured it. 1040 ez file The amount you claim as a deduction for the tax year as a result of the contribution, if you contribute less than your entire interest in the property during the tax year. 1040 ez file Your records must include the amount you claimed as a deduction in any earlier years for contributions of other interests in this property. 1040 ez file They must also include the name and address of each organization to which you contributed the other interests, the place where any such tangible property is located or kept, and the name of any person in possession of the property, other than the organization to which you contributed it. 1040 ez file The terms of any conditions attached to the contribution of property. 1040 ez file Deductions of At Least $250 But Not More Than $500 If you claim a deduction of at least $250 but not more than $500 for a noncash charitable contribution, you must get and keep an acknowledgment of your contribution from the qualified organization. 1040 ez file If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows your total contributions. 1040 ez file The acknowledgment must contain the information in items (1) through (3) under Deductions of Less Than $250 , earlier, and your written records must include the information listed in that discussion under Additional records . 1040 ez file The acknowledgment must also meet these tests. 1040 ez file It must be written. 1040 ez file It must include: A description (but not necessarily the value) of any property you contributed, Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), and A description and good faith estimate of the value of any goods or services described in (b). 1040 ez file If the only benefit you received was an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in a commercial transaction outside the donative context, the acknowledgment must say so and does not need to describe or estimate the value of the benefit. 1040 ez file You must get it on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. 1040 ez file Deductions Over $500 You are required to give additional information if you claim a deduction over $500 for noncash charitable contributions. 1040 ez file See Records To Keep in Publication 526 for more information. 1040 ez file Out-of-Pocket Expenses If you give services to a qualified organization and have unreimbursed out-of-pocket expenses related to those services, the following two rules apply. 1040 ez file You must have adequate records to prove the amount of the expenses. 1040 ez file If any of your unreimbursed out-of-pocket expenses, considered separately, are $250 or more (for example, you pay $250 or more for an airline ticket to attend a convention of a qualified organization as a chosen representative), you must get an acknowledgment from the qualified organization that contains: A description of the services you provided, A statement of whether or not the organization provided you any goods or services to reimburse you for the expenses you incurred, A description and a good faith estimate of the value of any goods or services (other than intangible religious benefits) provided to reimburse you, and A statement that the only benefit you received was an intangible religious benefit, if that was the case. 1040 ez file The acknowledgment does not need to describe or estimate the value of an intangible religious benefit (defined earlier under Acknowledgment ). 1040 ez file You must get the acknowledgment on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. 1040 ez file Car expenses. 1040 ez file   If you claim expenses directly related to use of your car in giving services to a qualified organization, you must keep reliable written records of your expenses. 1040 ez file Whether your records are considered reliable depends on all the facts and circumstances. 1040 ez file Generally, they may be considered reliable if you made them regularly and at or near the time you had the expenses. 1040 ez file   For example, your records might show the name of the organization you were serving and the dates you used your car for a charitable purpose. 1040 ez file If you use the standard mileage rate of 14 cents a mile, your records must show the miles you drove your car for the charitable purpose. 1040 ez file If you deduct your actual expenses, your records must show the costs of operating the car that are directly related to a charitable purpose. 1040 ez file   See Car expenses under Out-of-Pocket Expenses in Giving Services, earlier, for the expenses you can deduct. 1040 ez file How To Report Report your charitable contributions on Schedule A (Form 1040). 1040 ez file If your total deduction for all noncash contributions for the year is over $500, you must also file Form 8283. 1040 ez file See How To Report in Publication 526 for more information. 1040 ez file Prev  Up  Next   Home   More Online Publications