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Tag Archive for Charitable Contributions

Be Tax Wise With Your Charitable Contributions

Charles Woodson - Charitable Contributions

Donations to charities can be deducted as an itemized deduction on your tax return. This means that to achieve any tax benefit from your charitable donations, you cannot use the standard deduction and instead must itemize your deductions. However, if the total of all your itemized deductions does not exceed the standard deduction amount for the year, then you are better off taking the standard deduction, but in doing so, you will get no tax benefit from your charitable contributions.

As a rule, most taxpayers just wait until tax time to add up their potential deductions and then use the higher of the standard deduction or their itemized deductions. If you want to be more proactive, here are some strategies that might work for you.

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Tax Developments Over 2016

Harold Goedde

Here are a list of developments that occurred earlier in the year and the tax implications that follow them.

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Rules For Deducting Cash And Non-Cash Charitable Contributions

To be deductible, the contributions must actually be paid in cash or other property before the close of your tax year, whether you use the cash or accrual method. It is very important that you keep proper records of all your cash and non-cash contributions.

Rules for Deducting Cash Contributions

You cannot deduct a cash contribution, regardless of the amount, unless you keep a record of the contribution. The following rules apply:

• For individual contributions under $250, your proof can be your canceled check or your receipt, or a bank statement containing the name of the charity, the date, and the amount.
• For individual contributions of $250 or more, you must obtain a written acknowledgement Read more

Acknowledging Charitable Contributions

When someone gives you a gift, social protocol states that you should acknowledge the gift, expressing thanks to the donor for his or her thoughtfulness and generosity. It’s the right thing to do. That same protocol holds when the recipient is a charitable organization. However, in this case, legal requirements are added to social expectations. An IRS tax-exempt organization must fulfill certain legal obligations in acknowledging contributions from donors. So, in this case it’s not just the right thing to do, it’s the legal thing to do.

Let’s start simple with the most common type of contribution, one of cash. Cash contributions include payment in cash, by check, or through use of a credit card. Regardless of the form of the contribution, the organization is in essence receiving Read more

Charitable Contributions For Tax Year 2014

Individuals and businesses making charitable contributions for tax year 2014 should be reminded that several important tax law provisions have taken effect in recent years. Some of the changes taxpayers should keep in mind include:

Rules for Charitable Contributions of Clothing and Household Items

Household items include furniture, furnishings, electronics, appliances and linens. Clothing and household items donated to charity generally must be in good used condition or better to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Read more

S Corp – Charitable Donations

The most intriguing aspect of maintaining this tax blog is the pleasure of meeting and engaging a wide variety of successful people all with the courage to take the risk of venturing out on their own profession in pursuit of dreams and aspirations. Sharing with me the lessons learned through experiences chalked up to enduring hard knock after hard knock I have learned from my readers and subscribers along the way of which I am profoundly thankful.

I couldn’t help but notice that many of my friends and clients alike, particularly those of you in the business of providing services to the community, have become successful beyond anyone’s wildest expectations and are now more prepared than ever to accept the significance of gifting in the greater scheme of life’s affairs. Because people that read my Read more

Contemporaneous Charitable Contribution Documentation

It’s tax time again and as you are gathering your receipts and documentation I feel compelled to mention Contemporaneous Charitable Contribution Documentation.  That is quite a mouthful, but if you want to survive your Internal Revenue Service audit, you should keep reading.  The IRS requires you to keep documentation of the things you claim on your tax return – the income and the expenses. That part generally makes sense, but the rules can get very specific for charitable contributions.

For cash contributions of more than $250 you need to follow the rules exactly and they are different than the rules for contributions of less than $250. For that $50 donation to United Way, a copy of the check will be just fine. But if you give a $500 check to the United Way, a copy of the check is not going to cut it. That’s where the contemporaneous charitable Read more

Tax Provisions Not Extended

Is it real this time? –

In one of the most visible expressions of confusion in tax policy out of Washington D.C. is the treatment of a short list of tax laws that have been repeatedly extended only to expire only to be extended once again. These laws expire on midnight December 31st, 2013 unless… once again… the laws are extended.

• Teacher $250 deduction for qualified classroom expenses

• Deduction for state and local general sales taxes (in place of state income tax deduction)

• Deductibility of home mortgage insurance premiums Read more

Year End Tax Planning: US Expats Making Charitable Contributions

Many Americans living and working overseas are involved in charitable causes. The question often arises whether US expats living abroad can obtain the tax benefit for a charitable contribution deduction? The answer depends on various factors, including those discussed below.

Where is the Charity Organized or Created?

The mere fact that a United States taxpayer is living abroad will not prevent the taking of a charitable deduction on the tax return. The more critical consideration involves where the charity is created to which he is making the contribution. Under the US tax laws governing charitable deductions, the organization must be “created or organized in the United States or Read more

Year-End Planning – Charitable Contributions

Charitable contributions are one of the things that taxpayers can fully control when trying to get the best tax deduction.  The end of the year is often when people make charitable contributions.  People are making good on their charitable pledges for the year and the holiday season is a popular time to solicit donations and hold special events for charities.

Charitable contributions are allowed as an itemized deduction for taxpayers.  The deduction is limited to 50% of the taxpayer’s adjusted gross income for the year.  Sometimes for taxpayers with large contributions and a low income, planning the timing of contributions around that 50% limitation is critical.  Any excess charitable contributions can be carried forward, but that carry-forward only lasts five years. Read more

“O” Is For Organizations

TaxConnections Tax Blog - Charitible Organizations and taxes“O” is for organizations.  There are many kinds of organizations, but they can be handled in very different ways for tax purposes.  Charitable organizations are tax-exempt and contributions to those organizations are deductible for taxpayers.  How can you tell if an organization qualifies as tax exempt?  Everyone knows the United Way is a qualified charitable organization, but what about the Wayzata Orchestra Boosters?  Many booster clubs are set up as charitable organizations, but others are not.  It turns out the Wayzata Orchestra Boosters is a qualified public charity, meaning contributions to that organization are deductible.  So where can you look that up?

That link is the Internal Revenue Service site where you can search by name and state for a charitable organization.  Before you make any large charitable contributions, it might be worth checking them out to make sure they are legitimate charities.

It is especially important to check the tax-exempt status of political organizations.  Some are organized for the benefit of candidates and a contribution to those organizations is not tax-deductible.  Others may seem political but they are organized and run as a charitable organization on behalf of a specific issue instead of a specific candidate or party.  Some of those organizations could be receiving tax deductible contributions.  The best thing to do is go the IRS site and check them out.  Better safe than sorry when donating to organizations.

Taxes A to Z – still randomly meandering through tax topics, but at least for 26 posts in an alphabetical order.

In accordance with Circular 230 Disclosure

Establishing And Documenting Charitable Deductions

The IRS often puts charitable deductions under the microscope. This area has been ripe for abuse in the past, but the rules for establishing and documenting gifts to charity were recently tightened. As the deadline for filing 2012 returns fast approaches, the IRS is reminding taxpayers and practitioners about these requirements by posting nine tips for securing charitable deductions.

1. To qualify for a deduction, a taxpayer must make the donation to a qualified charitable organization. You can’t deduct contributions you make to an individual, a political organization, or a political candidate.

2. Taxpayers must file Form 1040 and itemize deductions on Schedule A. If the total deduction for all non-cash contributions for the year is more than $500, taxpayers must also file Form 8283, Non-cash Charitable Contributions, with their tax return.

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits that may be received in return for a contribution include merchandise, tickets to an event, or other goods and services.

What’s It Really Worth?

Generally, a taxpayer may deduct the fair market value of property donated to charity if he or she has held it longer Read more