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Charitable Contributions |
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In Actor Speak CASH CONTRIBUTIONS Starting in tax year 2007 the IRS instituted additional measures on Cash Contributions in any amount. You must be able to prove your contributions with written proof both from your bank or credit card as well as from the charitable organization to back up your claim at an audit. Keep this in mind at all times when you make your contributions.
Tax
Tips on Charitable Contributions Only contributions actually made during the tax year are deductible. This includes credit card charges and payments by check which are deducted in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the following year. A person donating property valued at more than $5,000 must obtain a qualified written appraisal. You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations Those who donate their cars may also claim only the fair market value of the car. The fair market value takes into account many factors, including the vehicle’s condition. The fair market value may differ substantially from the car’s Blue Book value. For vehicle donations, taxpayers must document the both the car donation and its fair market value. When you write off a contribution for donations other than cash or check, such as clothing, furniture and such, you must be able to detail all the items, the original purchase date, the original cost and the "street value" of each item you are claiming on the goods at the time of donation. It is not sufficient to get a receipt for "three bags of clothing" from Goodwill, the Salvation Army or the like. You also need to be able to verify the above information for all of the items in those bags. For that reason we recommend that you make your donations to the following organization specifically because THEY itemize the items and place a value of their determination on the goods and then mail you a copy of this for your records. With their written receipt, all of the hard work is done and experience has shown us you will probably get more for the deductions than most people give themselves. We can't speak too highly of them. For Contributions of Goods, we recommend:
"Council
Thrift Shops"
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In the Words of the IRS: Types of Qualified Organizations Generally, only the five following types of organizations can be qualified organizations 1) 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). It must be organized and operated only for one or more of the following purposes
Certain organizations that foster national or international amateur sports competition also qualify 2) War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions 3) Domestic fraternal societies, orders, and associations operating under the lodge system 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 4) Certain nonprofit cemetery companies or corporations 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 5) The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions To be deductible, your contribution to this type of organization must be made solely for public purposes Example 1. You contribute cash to your city's police department to be used as a reward for information about a crime. The city police department is a qualified organization, and your contribution is for a public purpose. You can deduct your contribution Example 2. You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Because the trust fund is part of the U.S. Government, you contributed to a qualified organization. You can deduct your contribution Examples. The following lists gives some examples of qualified organizations
Contributions You Can Deduct Generally, you can deduct your contributions of money or property that you make to, or for the use of, a qualified organization. A gift or 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 The contributions must be made to a qualified organization and not set aside for use by a specific person 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. See Contributions of Property, later Your deduction for charitable contributions is generally limited to 50% of your adjusted gross income, but in some cases 20% and 30% limits may apply. The total of your charitable contributions deduction and certain other itemized deductions may be limited. See the instructions for Form 1040 for more information 1) You get a small item or other benefit of token value 2) 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 The organization determines whether the value of an item or benefit is substantial by using Revenue Procedure 90–12 and 92–49 and the revenue procedure with the inflation adjusted amounts for the current year Written statement. A qualified organization must give you a written statement if you make a payment to it that is more than $75 and is partly a contribution and partly for goods or services. The statement must tell you that you can deduct only the amount of your payment that is more than the value of the goods or services you received. It must also give you a good faith estimate of the value of those goods or services The organization can give you the statement either when it solicits or when it receives the payment from you Exception. An organization will not have to give you this statement if one of the following is true 1) The organization is:
2) You receive only items whose value is not substantial as described under Token items, earlier 3) You receive only membership benefits that can be disregarded, as described earlier.
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National
Council of