If you’re giving non-cash contributions to charity, you need to let the Internal Revenue Service (IRS) know about it by filling out Form 8283.
In this article:
- What Is IRS Form 8283?
- When Do You Use Form 8283?
- Who Files for IRS Form 8283?
- Determining Fair Market Value (FMV)
- IRS 8283 Form Instructions
- IRS Form 8283 Supplemental Statement
IRS Form 8283 | What You Need to Know
What Is IRS Form 8283?
Individuals and organizations who donated non-cash contributions to a certain group must declare said gifts to the IRS if the value of the donated items exceeds $500. In this case, the individual or organization must file Form 8283.
The IRS Form 8283 should be treated as a separate form from monetary gifts and should not be used to compute or figure out your tax deductions for charitable donations in your income tax return.
What is a charitable donation? This is a gift offered by an individual, business, or corporation to a charity, foundation, or nonprofit organization in the forms of money, any type of property in real estate, vehicles, or other items of value.
When Do You Use Form 8283?
Use Form 8283 to report non-cash charitable contributions to qualified organizations.
These are usually religious, literary, or scientific groups. They may also include humanitarian organizations.
It is not for out-of-pocket expenses you incur in doing volunteer work. It’s also not the amount you donated by credit card or by check.
As a donor, if your non-cash gift is worth over $500, you must complete this form. Then you can use a certain amount as a charitable deduction.
Note, though, you should be capable of itemizing before you can claim this.
The amount of tax deduction is the one you claim before you apply income limits that may result in a carryover. The combined deductions each year should not be more than half of the adjusted gross income.
If it’s more, you may use it to reduce taxable income in one of the returns within the next 5 years.
Who Files for IRS Form 8283?
Individuals, corporations, and partnerships use IRS Form 8283 if they have given charitable gifts or donations to certain groups or individuals. However, certain limitations exist depending on your type of registered business.
IRS Form 8283 for C-Corporations
If you are a C-corporation, you may only use this form if the amount you are claiming has a deduction of more than $5,000.
What is a C-corporation? This type of corporation files separate taxes for the shareholders and the business, creating a double taxation situation.
IRS Form 8283 for Partnerships and S-Corporations
What is an S-corporation? This is a special tax filing status for small businesses where the corporation doesn’t have to file corporate income tax and instead passes on profit/loss to the individual shareholders.
Are you a partnership or an S-corporation? If you made a donation of non-cash gifts over $500, you should file IRS Form 8283.
You can complete this with other forms. These are 1120-S, 1065, or 1065-B.
If you’re donating similar items worth $5,000 or more, fill out Section B on Form 8283.
Sometimes the worth of a donation from different shareholders or partners is less than $5,000. You can still complete Section B.
Provide each person with a form copy. This way, they can also claim contribution deduction.
IRS Form 8283 Partners and Shareholders
Partners and shareholders must also declare their non-cash contributions when they file their own tax forms. The corporation will provide the details you need for filing Form 8283.
When you receive a copy of the list, attach it to your tax return form. Make sure to use the amount declared in the Schedule K1 (Forms 1065 or 1120s) to know your tax deduction.
If the S-corporation is not required to give a copy of the shareholder, add the amount on your Schedule K1 with the valuation of other non-cash donations you made in Section B of your Form 8283.
Determining Fair Market Value (FMV)
What’s the value of the in-kind gifts? You have to refer to the fair market value of the item you are donating.
You may need a qualified appraisal of the property. You can find the fair market value of a vehicle by using Kelley Blue Book or another appraisal guide.
Fair market value is the price the buyer is willing to pay. It is also the amount you can accept as a seller.
You must account for issues with the item in determining its value.
For example, you are planning to donate a 2005 vehicle worth $8,000. The car, though, has dents and high mileage.
The fair market value will be lower, according to the vehicle guides. The FMV of the vehicle will be the same as the market price from a private seller’s guide list if the vehicle has the same model, make, year, and condition of car sold in the same area.
As the taxpayer, you are responsible for knowing the fair market value, but you can ask for help. Search for a qualified appraiser.
This is a person or a company that has expertise on the in-kind donations. You need them when you are planning to donate many related or similar items and their value exceeds $5,000.
Sometimes the charitable organization decides to sell the goods. You can use the amount they sold the items for as your charitable contribution deduction.
When to Claim Deductions for FMV
If the property donated can become ordinary income-generating, or may result in a short-term capital gain if sold on the date of donation, the supposed ordinary income can be deducted from the FMV for the final market value.
On the other hand, if the property may be used for long-term capital gain, it may be assessed as a capital gain property. With this kind of charitable contribution, the declared value will be based on how long it was used as a business, which should have been in operation for at least one year.
You cannot claim deductions for historical buildings unless specific instructions to prohibit changes in the building’s exteriors have been stipulated. If so, you need to attach a qualified appraiser’s signed copy, pictures of the building’s exterior, and the list of restrictions for the building’s changes.
The FMV of intellectual property donations, meanwhile, shall be based on its appraised value. You may claim for additional deductions based on a percentage of the donee’s income off of what you gave.
IRS 8283 Form Instructions
File Form 8283 for the tax year you can claim the deduction. You may have to fill out Sections A, B, or both.
Filling Out Section A
Use Section A if the value of your donation is less than $5,000 for one item or a group of similar objects. For publicly traded securities donation, you will also fill out Section A.
If you have an appraiser, the person needs to sign Part III of the form. The date of the appraisal should be about 60 days or less before the date of the donation.
Filling Out Section B
Use Section B if the donated property or item is over $5,000. This can be a single item or group of similar items.
These can refer to objects in the same generic category.
These include paintings, jewelry, buildings, and coin collections. They may also include clothing, land, non-public traded stock, or books.
Let’s say you donated $500 worth of jewelry. You also gave $10,000 in publicly traded securities and $7,000 for a collection. You report the securities and jewelry in Section A. The value of the books goes to Section B.
In Form 8283, you can deduct $5,900 for donated books to various colleges:
- Community College A – $2,500
- University B – $2,500
- College C – $900
You record these donations in Section B because the total amount of the deduction, which is $5,900, is over $5,000. The items are similar, even though different schools received them.
IRS Form 8283 Supplemental Statement
Let’s say you want to donate a conservation easement.
You also need to file IRS Form 8283 Supplemental Statement. It makes it clear such easement meets the tax code requirements.
You know your land the best. The more information you put in the supplemental statement, the better it is for the IRS agent.
The statement tells the reader about the tax code requirements. It also provides information about the property.
IRS Form 8282
When you give a donation, the donee must file IRS Form 8282. It needs to provide information about the disposal of the property.
The qualified organization does not need to submit this form if the date of donation is over three years. However, the organization should submit this form if the charitable gifts were received within the last three years.
IRS Form 8283 Examples
In the previous sections, you can read some of the examples. Another one is the special rule for some C-corporations.
It uses the difference between the amount as a deduction and the amount of cost of goods sold.
This rule might cause a C-corporation to not have to file Form 8283.
If so, then the company has to attach a statement to its income tax return. If it files Form 8283 Section A instead of Section B, it must also file a statement.
An example is clothing donated from the inventory of a retail store. If the clothing cost $6,000 (cost of goods sold) and the deduction was $9,000, the amount to claim is $3,000.
The retail establishment will have to file Form 8283 Section A since the donation was under $5,000.
Fill out the appropriate sections of Form 8283 if you’re making a non-cash donation. You then have to attach it to your tax return to claim a deduction.
The sections to fill out depends on the type of entity you are and the amount of the donation. Read our other tax articles about donations.
Ultimately, you can always consult a tax professional if you’re unsure how to declare your in-kind donations. You can also download a copy of the form here to further study the line items.
Have you made a claim using Form 8283 before? Share your thoughts in the comments section below.
If you owe back taxes, visit taxreliefcenter.org for more information on tax relief options.
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Editor’s Note: This post was originally published on April 4, 2018, and has been updated for quality and relevancy.