Charity For Taxes
Some people may think it is morally crippling to give for the purpose of gain
, but either way, someone in need is getting help. If the giver is rewarded for their charitable act, it just means more happiness for more people; and the philosopher Emmanuel Kant would be pleased.
Making donations to a charitable cause are considered tax deductable expenses. This means that donating can reduce your taxable income and therefore lower your tax bill. Though not everyone and everything can be deducted, it is important to keep track of everything given just in case it can be claimed.
Donations must be given in the form of money or property, i.e. clothing, toys, food, electronics, furniture, etc. The money or property must also be given to a qualified organization like Goodwill, the Salvation Army, disaster relief efforts, homeless shelters, churches, or organizations like St. Jude's Children's Hospital or Breast Cancer Awareness.
Any money or property given to your struggling next-door-neighbor or a homeless man on the street will not be deductable on you taxes. Most charities will notify you if they have a tax-exempt status from the IRS; religious and church based organizations are not required to have this status, however.
The money and property must also be itemized, meaning you have to know exactly what you gave and how much money it was worth. Donators must also keep a detailed record of checks, receipts, bank statements, acknowledgement letters from charities, and donated property appraisal forms.
If cash contributions of more than $250 are made, the individual must have supporting documentation indicating the name of the organization donated to, the date of contribution, and the exact amount given.
Any non-cash or property charity contributions must be recorded and claimed at fair market value. If the contribution exceeds $500, the individual must attach special forms to their tax papers. If the contribution exceeds $5,000, there must be a documented appraisal of the property's value.
Property contributions must be in 'good condition' in order to be claimed on tax forms. This means that it is adequate and usable for future use by others. The property must also be described, in writing, as to what it is and what condition it is in when given for charity.
There are limitations on how much a person can claim as a deductable on their taxes. In most cases, a person can deduct up to 50% of their adjusted gross income per year for cash contributions; up to 30% of their adjusted gross income for property contributions; and up to 20% of their adjusted gross income for appreciated capital gains assets.
If the donations exceed the maximum amount claimable on taxes for that year, contributions may be rolled over to the next tax year. Excess contributions may be carried over for up to five years after the initial donation.
There are some charitable offerings that cannot be deducted from your taxes: any assistance given to political parties, campaigns or committees; anything given to an individual and not an organization; any money given to professional associations (a country club or golf course); any contributions to labor unions, business associations, of chambers of commerce; any assistance given to profitable schools or hospitals (private charter schools or private hospitals); or any fines paid to any government body (traffic citations). Individuals cannot deduct the value of time they spent volunteering for an organization either; i.e. building homes for the homeless or helping with a neighborhood park clean-up.
Things that can be claimed are money given as tithing to a church or religion-based organization; clothing, furniture and toys given to organizations like Goodwill or the Salvation Army; food given to flood, hurricane, tornado, or earthquake victims; and money given to non-profit organizations like the American Cancer Society or the Change for the Children Foundation.
It is important to what you can claim as a deductable on your taxes and where qualifying organizations and foundation are located that you can give to. Make sure you fill out the proper paperwork and keep a detailed record of every contribution you make.
by: Jack Landry
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