Tax Benefits and Reporting Procedures for In Kind Gifts

 

Habitat for Humanity of East & Central Pasco is a charitable 501(c)(3) organization. As such, donations made to our affiliate are deductible to the full extent under IRS code.

Individuals may claim deductions as usual on their 1040 Form. Corporations who donate to our affiliate receive an additional tax deduction in addition to the regular deduction on their tax forms.

 

Section 170(e)(3) of the IRS code stipulates that if a corporation makes a donation of property related to their normal course of business (e.g. a window manufacturer donating windows) to our affiliate, they are allowed to claim additionally one half of the difference between the cost and the fair market value of their donation.

 

For example, a window manufacturer donates a window that costs $100. The fair market value for the window is $200. The window manufacturer is thus entitled to claim a deduction of $150 ($100 cost + half of the difference between cost ($100) and fair market value ($200).

 

One limitation placed on this additional deduction is that the total deduction cannot be more than double the corporation’s cost. Using the previous example, if the window cost $100, but sold on the market for $400, the most the manufacturer could claim is $200. Because the difference between the market value and the cost is greater than the original cost, the manufacturer could only claim the maximum of twice the cost.

 

Tax reporting procedures

 

With every in-kind donation to Habitat for Humanity of East & Central Pasco County, a thank you letter confirming your donation is sent. We do not determine values for items donated to our affiliate. It is the responsibility of the donor to determine and report the value of the item donated to the IRS. Please keep our thank-you letter in your files as a receipt of your donation.

 

Individuals

 

When reporting your charitable contribution to the IRS, there are different procedures to take according to the value of the donation made.

 

If the value of the individual donation is less than $500, no special forms need to be completed. Simply claim the deduction on your standard 1040 form.If the value of the individual donation is greater than $500 and less than $5000, a supplementary IRS form, Form 8283, is required. This form asks for more detailed information about the donated item as well as any conditions made for use of the item.

 

If the value of the individual donation is greater than $5000, the supplementary IRS Form 8283 is again required. In addition to providing detailed information about the donation, the item must be appraised. Also, the form must be signed by a certified appraiser and an authorized signee from our organization.

 

Corporations

Please consult your accountant for specific procedures.