Guide to Charitable Contributions
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Guide to Charitable Contributions

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The 2013 "Guide to Charitable Contributions" digital brochure is provided by Jim Stonick of Federal Direct Tax Services of High Point, NC. If you have any questions regarding starting a business ...

The 2013 "Guide to Charitable Contributions" digital brochure is provided by Jim Stonick of Federal Direct Tax Services of High Point, NC. If you have any questions regarding starting a business and/or any financial/tax related questions - please don't hesitate to contact Jim personally at (phone) 336-687-5429 or (email) jim.stonick@gmail.com

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Guide to Charitable Contributions Guide to Charitable Contributions Document Transcript

  •  2013  Guide to Charitable Contributions Federal Direct Tax Services 200 W Lexington Ave. Suite 102 High Point, NC 27262 Appointments Mon-Sat Contact Jim Stonick 687-5429 Charitable Organizations Contributions That Benefit the TaxpayerQualified charitable organizations include nonprofit If a taxpayer receives a benefit in exchange for a charita-groups that are religious, charitable, educational, scien- ble contribution, the deduction is reduced by the valuetific, or literary in purpose, or that work to prevent cru- of the benefit received.elty to children or animals. Example: Paul made a $70 donation to Public TV and re- Examples of Qualified and Nonqualified Organizations ceived a $40 CD of his all-time favorite band, the Herman’s Qualified Nonqualified Hermits, in appreciation for his donation. His deduction equals $30.• Churches, mosques, temples, • Country clubs, lodges, synagogues. fraternal orders, and similar• Boy and Girl Scouts, Boys and groups, unless they are a Auto Expenses Girls Clubs of America, Red Cross, qualified charity. Deductible out-of-pocket expenses include the cost of Goodwill, Salvation Army, United • Civic leagues, social and using the taxpayer’s auto in providing services for a Way. sports clubs, labor unions and charitable organization. Deduct the actual cost of gas• Fraternal orders, if gifts used for chambers of commerce. qualified charitable purposes. • Political organizations and and oil or the standard mileage rate. Add parking and• Veterans’ and certain cultural candidates. tolls to amount claimed for either standard mileage rate groups. • Communist organizations. or actual expenses. A mileage log is required.• Nonprofit schools, colleges, [IRC §170(k)] museums, hospitals, and • Foreign organizations. Standard Mileage Rate organizations trying to find medical Exceptions: Contributions The general standard mileage rate for charity is 14¢ per cures. to certain Canadian, Israeli,• Federal, state, and local govern- and Mexican charities are mile in 2012. ments, if gifts are solely for public deductible. See IRS Pub. 526. purposes, including nonprofit vol- • Homeowner’s associations. unteer fire departments, and public Contributions of Property parks facilities. If used items were given to charity, such as clothing or furniture, the fair market value of the items is used to determine the deductible amount. Fair market value is Expenses Incurred While Volunteering what a willing buyer would pay a willing seller whenOut-of-pocket expenses incurred in performing volun- neither has to buy or sell and both are aware of the con-teer work for a charitable organization (including the ditions of the sale.charitable mileage deduction) are considered cash con-tributions. The value of a donor’s time is not deductible.  Planning Tip: Most cell phones today can take pictures. Take a picture of all items donated. Keep the electronic pictures for proof the items were in good used condition or better at the time they were donated.
  • of the vehicle by the donee organization. A copy of the written acknowledgement must be attached to the tax return. Deduction Limits A deduction for used items donated to a charity areNote: No deduction is allowed for a charitable contribu- generally equal to the fair market value of the item attion of clothing or household items unless the clothing the time of the donation. In the case of vehicles, the de-or household item is in good used condition or better. duction may be less than fair market value under theThe IRS is authorized by regulation to deny a deduction gross proceeds deduction limit.for any contribution of clothing or a household item 1) If the organization sells the donated vehicle without athat has minimal monetary value, such as used socks significant intervening use or material improvementand undergarments. by the donee organization, then the deduction is lim- ited to the gross proceeds received from the sale. Recordkeeping Rules 2) If the organization sells the donated vehicle after sig- for Charitable Contributions nificant intervening use or material improvement to the vehicle, the deduction is limited to the fair marketTo help substantiate a deduction for the fair market val- value of the vehicle.ue of used items donated to charity, make a list of each 3) If the organization sells the vehicle at significantly be-item donated on a separate sheet of paper, along with low fair market value, the gross proceeds limitationthe following information. will not apply if it was a gratuitous transfer to a needy• Name and address of charity. individual in line with the purpose of the charity to• Date items were donated to the charity. provide transportation to the poor.• Description of each item donated.• Fair market value of each item at the time they were Contributions of Less Than $500 donated. A written acknowledgement is still required if the con-• Date each donated item was originally purchased or tribution is $250 or more. If the organization sells the acquired. vehicle without any significant intervening use or mate-• Cost or other basis of each item donated. rial improvement, and the sale yields gross proceeds of $500 or less, the deduction is equal to the lesser of fairPart Contribution, Part Goods or Services market value or $500.A written statement from a charity is required if a do-nation is more than $75 and is partly a contribution and Example: Jack donates his car, worth $800, to a charity thatpartly for goods or services. The statement must contain turns around and sells it for $400 without any significant in-an estimate of the value of goods or services received. tervening use or without making any material improvements. Jack can deduct $500 as a charitable contribution for the dona-Exception: A written statement for goods or services is tion of his car. Because his deduction is $250 or more, he stillnot required if one of the following is true. needs a written acknowledgement from the charity, but the ac-1) The charity is a federal, state, or local government or knowledgement is not required to be attached to his return. a religious organization where the benefit is an intan- gible religious benefit, such as admission to a religious ceremony.2) The goods or services are of token value. Contact Us There are many events that occur during the year that can affect3) The goods or services are membership benefits. your tax situation. Preparation of your tax return involves sum- marizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the Donating a Vehicle time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advanceWritten Acknowledgement if you have questions about the tax effects of a transaction orObtain written acknowledgement from the organiza- event, including the following:tion, which includes details on the use or disposition • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. revenue department. • Job change. • Divorce or separation. This brochure contains general information for taxpayers and • Marriage. • Self-employment. should not be relied upon as the only source of authority. • Attainment of age 59½ or 70½. • Charitable contributions Taxpayers should seek professional tax advice for more information. • Sale or purchase of a business. of property in excess of • Sale or purchase of a residence $5,000. Copyright © 2012 Tax Materials, Inc. or other real estate. All Rights Reserved