medicine contraindications

Charitable Contributions

There are two kinds of charitable donations you can make: Cash and Everything Else.

Cash Donations

Cash charitable donations are deductible when made to a qualified charitable organization, and are limited to 50% of your income.

This 50% limit is imposed on your total charitable deduction, cash plus non-cash donations.

Everything Else

Goods donated to a charity are valued at fair market resale price. This might be the Blue Book value of a used vehicle or the price a charity outlet store could sell the item for.

One commonly asked question is:

Can I get a deduction for donating my time and services to a charity?

The answer unfortunately is “No“. Nothing is allowed for donations of time to a charity. Out-of-pocket expenses are a different matter and are treated as a cash donation. Examples of allowable out-of-pocket donations are phone call expenses, driving mileage and supplies needed to perform your service.

An Alternative — Consider donating appreciated stocks or mutual funds to charity. You avoid the capital gains and get to take the charitable deduction for the fair market value of the investment!

Example: Let’s say you invest $1,000 in a mutual fund and it grows to $2,000. You donate the Mutual fund to charity. You pay NO tax on the capital gain AND you get to write off $2,000! Be careful though. If you cash in the fund first and then donate the proceeds you DO pay the gain tax. You’ll still get to write off the amount you give away. Timing is everything.

GIVER BEWARE!

Keep Good Records — You must maintain good records of any contribution you make whether cash or non-cash. Follow the requirements outlined below when documenting contributions:

Less Than $250:

NON-CASH

Receipt Required

CASH

Receipt Required

More Than $249 & Less Than $500:

NON-CASH

Receipt required and contemporaneous written acknowledgement from the charity

CASH

Receipt required and contemporaneous written acknowledgement from the charity

More Than $500 and Sold by Charity:

NON-CASH

Receipt required and Form 1098- C showing charity’s sales price, and attach 1098-C to Form 1040, and deduction limited to 1098-C amount

CASH

Receipt required and contemporaneous written acknowledgement from the charity

More Than $500 & Less Than $5,000 and
Retained for Use or Improved by Charity

NON-CASH

Receipt required and Form 8283 and contemporaneous written acknowledgement meeting certification of non-sale requirements, deduction allowed at fair market value using private party sales pricing guidelines in used vehicle pricing guides

CASH

Receipt required and contemporaneous written acknowledgement from the charity

Over $5,000 and retained for use or improvement by charity

NON-CASH

Receipt required and written appraisal and signed Form 8283 and contemporaneous written acknowledgement meeting certification of non-sale requirements, deduction allowed at fair market value using private party sales pricing guidelines in used vehicle pricing guides

CASH

Receipt required and contemporaneous written acknowledgement from the charity

Over $500,000

NON-CASH

Receipt required and written appraisal (attached to Tax Form) and signed Form 8283 and contemporaneous written acknowledgement meeting certification of non-sale requirements, deduction allowed at fair market value using private party sales pricing guidelines in used vehicle pricing guides.

CASH

Receipt required and contemporaneous written acknowledgement from the charity

Not Qualified as Charitable Organizations — Here is a partial list of organizations that do NOT qualify as charitable organizations. Give them a donation and there is no tax deduction allowed.

  • Civic Leagues
  • Social Clubs
  • Labor Unions
  • Chambers of Commerce
  • Homeowners’ Associations
  • Lobbying Groups
  • Individuals*
* This is true even if the individual will ultimately end up with the donation. It must pass through a qualified charitable organization first in order to give you a tax deduction. Of course, as with most tax laws there is an exception:

A deduction for an amount used to maintain certain full-time students as a member of the taxpayers household is allowed. The amount is limited to $50 per calendar month and the student must be in the twelfth grade or lower. An example qualifying under this exception would be the cost of hosting a foreign exchange student.

, , , ,

Comments are closed.