Cash & Non-Cash Contributions
Includes money or property given to:
--Churches, synagogues, temples, mosques and other religious organizations.
--Federal, state and local governments, if contribution is solely for public purposes.
--Nonprofit schools, hospitals and volunteer fire companies.
--Public parks and recreation facilities.
--Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy/Girl Scouts, Boys/Girls Clubs of America, etc.
--War veterans' groups.
Charitable travel. Travel expenses such as transportation (actual expenses or 14 cents per mile), meals and lodging are deductible if there is not a significant element of personal pleasure, recreation or vacation in the travel. Because charitable travel expenses are not business-related, they are not subject to business expense limitations.
Volunteer out-of-pocket expenses when serving a qualified organization. For example, scout leaders can deduct the cost of uniforms (and cleaning) that are worn when performing donated services, but that are not suitable for everyday wear.
Delegate to a church convention. Deduct the unreimbursed expenses of attending. A person must be a delegate and not merely attending on his/her own. For example, deductions were allowed for a religious organization's World Congress in Tokyo. Similar deductions have been allowed for other church and veterans' organizations.
Out-of-pocket expenses. Substantiation from the charity is required if a volunteer claims a deduction for unreimbursed expenses of $250 or more. The charity must substantiate only the type of services performed (not dates or amounts of expenses.
Tickets to college games. A payment made to a college or university in exchange for a right to buy tickets to a sporting event qualifies for a charitable deduction of 80% of the amount paid. Any amount actually paid for tickets is not deductible.
Noncash Donations -- Substantiation Requirements
General recordkeeping requirements for noncash contributions:
--Name of charitable organization.
--Date and location of contribution.
--Reasonable detailed description of contributed property.
--Fair market value and method of valuing the property.
--Cost or other basis of the property if FMV must be reduced
--Less than $250. A receipt is not required where it is impractical to get one. For example, when property is left at a charity's unattended dropsite.
--$250 to $500. Written acknowledgment from the charitable organization is required. The acknowledgment must contain the name and address of the organization, date and location of the contribution, and a description of the property. It must also state whether any goods or services were provided to the donor in return for the contributions and the FMV of such goods or services.
--$501 to $5,000. Same records required as the $250 to $500 category. In addition, the taxpayer's records must show how the property was acquired, the date of acquisition, an explanation should be attached to the tax return.
--More than $5,000. Same requirements as the $501 to $5,000 category. Most contributions over $5,000 require a written appraisal.
A written appraisal requirement exists for charitable contributions of property for which the claimed value exceeds $5,000 and an income tax deduction is claimed. Also, the recipient organization must file an information return if it disposes of the property within two years of receipt.
Fees paid to determine the FMV or donated property are not deductible as contributions. They may be claimed as miscellaneous itemized deductions subject to the 2% of AGI limitation.
Charitable contributions of motor vehicles (as well as boats and airplanes) are covered by strict rules for claimed deductions in excess of $500. The taxpayer's allowable deduction depends on how the donated vehicle is used by the charitable organization.
--Outright sale. If the organization sells the vehicle without using it significantly for charitable purposes or making material improvements, the deduction is generally limited to the gross proceeds from the sale. When this general rule applies, the FMV of the donated asset is irrelevant. The gross sale proceeds amount is reported on line 4c of the Form 1098-C, Contribution of Motor Vehicles, Boats and Airplanes, provided to the donor (and to the IRS) by the charity.
--Transferred to needy individual. The sale-proceeds limitation general rule doesn't apply if the charity sells or transfers the vehicle to a needy individual for below FMV in furtherance of the organization's charitable purpose. In this case, the donor can generally deduct the FMV of the vehicle (or boat or plane) as of the contribution date -- even if FMV exceeds the gross sale proceeds figure. The charity will indicate when this exception applies by checking box 5b on Form 1098-C.
--Significant use or material improvements. The sale-proceeds limitation general rule also doesn't apply if the charity keeps the donated vehicle (or boat or plane) and uses it significantly for charitable purposes or makes material improvements before ultimately selling it. In these cases, the donor can generally deduct the FMV of the vehicle (or boat or plane) as of the contribution date. The charity will indicate when one of these exceptions applies by checking box 5a on Form 1098-C and describing the significant use or material improvements on line 5c.
Form 1098-C rules. The taxpayer cannot claim any deduction above $500 for a donated vehicle (or boat or plane) unless the recipient charity provides an acknowledgment on Form 1098-C.
The Form 1098-C must have been provided within 30 days of the sale (or within 30 days after the donation if one of the exceptions explained above applies). The donor must attach Copy B of Form 1098-C to Form 1040.
For donations after August 17, 2006, no deduction is allowed for donated clothing and household goods unless they are at least in "good used condition".
Credit Card Rebates
The IRS has ruled that cardholders can get a charitable deduction if they elect to have the credit card company give the rebates they have earned on their purchases to charity. The rebates are not taxable income whether given to charity or kept by the cardholder.
Life-Care Retirement Deduction
Many life-care retirement communities are run by tax-exempt organizations, but payments made to the organization are generally not deductible charitable contributions because services are received in exchange. Amounts that exceed regular monthly fees and for which no extra benefits are received may be deducted as charitable contributions.
List of Tax-Exempt Organizations
IRS Publication 78, Cumulative List of Organizations, lists tax-exempt organizatons that qualify for a charitable contribution deduction. It is available on the IRS website at www.irs.gov in the section titled Charities & Non-Profits.