Charitable Contributions

If you itemize deductions on your Federal tax return, you probably have some measure of Charitable Contribution deductions on Schedule A of your 1040. This is one of the most commonly questioned areas by our clients: Can I deduct this? As you move through the remainder of the year, please keep in mind the following as you plan your charitable giving.

• Limits: The total amount of your deductions for charitable contributions cannot exceed 50% of the taxpayer’s Adjusted Gross Income. Additionally, special 20% and 30% rates apply to certain types of charitable contributions. Any contributions exceeding the 50% AGI limit in a given year can be carried over to each of the five succeeding years.
• Cash is King: Cash is the simplest way to make a charitable contribution. However, it is not the only method that can be used. A variety of other options are available to you. Briefly, a few of those options are Credit Card contributions, Tangible personal property, Stock donations, Real Estate, and many others. We will discuss some of these unique options in our next blog.
• Charitable Travel: Transportation expenses can be added to any monetary or property charitable contributions made; either actual expenses or 14 cents a mile is the deductible amount. Additionally, meals and lodging as related to the charitable travel are deductible.
• Records Requirements: Regardless of the amount, to deduct a contribution of cash, check or other monetary gift, a written record must be maintained. This written record can be in the form of a bank record, payroll deduction or written communication from the charitable organization. A new trend is charitable donations via text and for this sort of donation a copy of the phone bill will suffice.
• What’s Not Deductible? The list is long here, but I will highlight some of the major areas that confuse clients as they total their charitable contributions for the year. Money or property given to the following are NOT deductible contributions:


 Civic leagues, sports clubs, labor unions, chambers of commerce
 Foreign organizations (with minor exceptions)
 Lobbyist groups, political groups or candidates
 Cost of raffle, bingo or lottery tickets
 If your contributions entitle you to entrance/participation in a charity related event, you can deduct only the amount that exceeds the FMV of the benefit received. For example, you purchase tickets for a charity ball that cost $500 and the FMV of the tickets are $200. Only $300 ($500-$200) can be deducted.
 Value of time or services

Join us for our next blog as we will talk more specifically about non cash contributions: what form they can take and any special rules that may apply.



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