This is Part V in my Individual Tax Series. The focus of this article is Charitable Deductions. The information contained in this article is for general information. Consult your tax advisor for additional information.
Background
Generally, donations of money or property to a charity, is deductible if you itemize your deductions. Typically, you itemize your deductions if the itemized amount is over what the Government gives you in a standard deduction. The following are guidelines for making donations to charity.
What is Deductible
Generally, donations of cash and property to a 501c3 charity, is deductible. To find out if the charity that you have donated to is a 501c3, you can check the IRS’s website at: www.irs.gov.
For donations of cash, you must maintain a record of the donation to prove that you made the donation. Proof of the donation can be obtained by the organization, canceled check, bank records, etc. For donations of property, you must keep a copy of the receipt from the organization. Organizations do not put the cost of the donated property on the receipt. You must determine the fair market value of the property donated. You can refer to Publication 561 on the IRS’s website.
What is Not Deductible
Contributions of cash or property to a Political Organization are not deductible. The time that you spend volunteering is not deductible. Contributions made to an organization for which you received a gift equal to the contribution are not deductible. Contributions to non qualified charities, individuals, personal expenses, appraisal fees, partial interest in property, are also not deductible.
Qualified Organizations
Typically, qualified organizations are one of the following:
- Churches and conventions or associations of churches
- Educational organizations
- Hospitals and certain medical research organizations
- The United States or any State
- Corporations, trusts, or community chests, funds, or foundations organized and operated only for charitable, religious, educational, scientific, or literary purposes, or to prevent cruelty to children or animals
- Organizations that may not qualify as “publicly supported”
This list is not all inclusive, but you get the general idea
Limits on Deductions
The amount of your charitable contributions, are limited to 50% of your adjusted gross income. For example, if your adjusted gross income is $25,000.00, you may only deduct $12,500.00 in contributions. If you made additional contributions in excess of $12,500.00, they will be carried over to the next tax year.
These are the basics of Charitable Contributions. For further information see Publication 526 at www.irs.gov
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If you have any questions regarding this article, you can email me at: craig@smalleynco.com
Articles in this Series:
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