What Is the Limit for Non-Cash Contributions?

What Is the Limit for Non-Cash Contributions?
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The Internal Revenue Service, or IRS, permits you to make non-cash contributions to charitable organizations and take a tax deduction. The IRS limits the amount of non-cash deductions you can take each year, and more valuable donations require additional documentation before allowing the deduction. If your non-cash contributions exceed the allowed amount, there are carryover provisions that permit you to take deductions in subsequent years.

Non-cash Contribution Limit

To deduct noncash contributions you will need to itemize deductions on your tax return. IRS Publication 526 specifies that you can deduct property contributions in full up to 30 percent of your adjusted gross income. Noncash contributions of appreciated capital gains assets are limited to 20 percent of your adjusted gross income. You report noncash contributions on Form 8283.

Contribution Value Documentation Requirements

Publication 526 outlines the records and documentation required to deduct noncash contributions. Donations under $250 require a receipt that includes the name of the charitable organization, the date of the contribution and a description of the item or items donated. Contributions between $250 and $500 must also include information in the acknowledgment about whether you received any goods or services as a result of your contribution and a good faith estimate of the value of the contribution. Noncash contributions for which you are declaring a value over $500 also need a description of how you acquired the donated item, the date you acquired the donated item, and some sort of cost basis of the donated item -- unless it is a publicly traded security.

Valued Over $5,000

Any individual donation valued over $5,000 must have an independent appraisal. You will need to supply a copy of the appraisal when you submit your tax return.

Carryover Provision and Penalties

Most noncash contributions have a five-year carryover provision. If the value of the contribution exceeds the deduction limits of your adjusted gross income, you can continue to carry over the deduction until you take the full deduction or for 5 years. If you intentionally overstate the declared value of the noncash donation by 150 percent, the IRS can assess a penalty of 20 percent of the amount of underpaid tax. The penalty increases to 40 percent if the overstated value is more than 200 percent of the item's value.