has specific guidelines with regard to the tax deduction of charitable donations, including what is and is not deductible,
limitations on deductions, and how deductions are to be documented.
We all know that cash contributions to a qualified
charitable organization are deductible if you itemize your deductions. However,
what about other non-cash contributions? If you volunteer your time for an organization, the value of your services is not
deductible but all of your out-of-pocket expenses, including mileage, are deductible. If you drive your vehicle for a charitable
purpose, you can deduct 14 cents per mile as a charitable contribution.
Did you clean out your closets and drop off bags
of clothing at the local Salvation Army or Goodwill store? The cash value of those items is a deductible charitable contribution.
Contributions of property to a charitable organization
are allowed to the extent of the propertys fair market value as well. For example,
you have stock that has appreciated in value over the years. Instead of selling the stock and paying tax on the gain, donate
the stock itself. You can take a deduction for the appreciated value on your tax return, provided you limit the deduction
to 30% of your adjusted gross income. This rule applies to all capital assets you contribute.
When making a charitable contribution of $250
or more to one qualified charitable organization, you must receive written acknowledgment from the organization before you
file your income tax return and claim the deduction. Separate contributions of less than $250 to the same charitable organization
do not require written acknowledgement.
As tax professionals,
we are knowledgeable in these areas and can direct you in proper handling of cash donations, personal property donations and
even real property donations, in an effort to take advantage of the full limitations allowed by law.