 IRS Tips You Should Know
by Angela Smith, Treasurer, Giving
Spirit
Contributions You Can Deduct
Generally,
you can deduct your contributions of money or property that
you make
to, or for the use of, a qualified organization like Giving
Spirit. A
gift or contribution is "for the use of" a qualified
organization when it is held in a legally enforceable trust for the qualified
organization or in a
similar legal arrangement.
The contributions must be made
to a qualified organization and not set aside for use by a specific person.
If you give property to a
qualified organization, you generally can deduct the fair market value of the
property at the time
of the contribution.
For more details
see IRS Pub
526
Your
deduction for charitable contributions is generally limited
to 50% of
your adjusted gross income, but in some cases 20% and 30%
limits may
apply.
Contributions
From Which You
Benefit
If you receive a
benefit as a result of making a contribution to a qualified
organization, you
can deduct only the amount of your contribution that is more
than the value of
the benefit you receive. For more details
see IRS
Pub
526
Example
1.
You pay $65 for a
ticket to a dinner-dance at a church. All the proceeds of
the function go to the
church. The ticket to the dinner-dance has a fair market
value of $25. When you
buy your ticket, you know that its value is less than your
payment. To figure
the amount of your charitable contribution, you subtract the
value of the
benefit you receive ($25) from your total payment ($65). You
can deduct $40 as a
charitable contribution to the church.
When
To
Deduct
You can deduct your
contributions only in the year you actually make them in
cash or other property.
This applies whether you use the cash or an accrual method
of accounting.
Time
Of Making
Contribution
Usually, you make a
contribution at the time of its unconditional delivery.
Checks.
A check that you
mail to a charity is considered delivered on the date you
mail it.
Credit
card.
Contributions
charged on your bank credit card are deductible in the year
you make the charge.
Pay-by-phone
account.
If you use a
pay-by-phone account, the date you make a contribution is
the date the financial
institution pays the amount. This date should be shown on
the statement the
financial institution sends to you.
Stock
certificate.
The
gift to a charity of a properly endorsed stock certificate
is completed on the
date of mailing or other delivery to the charity or to the
charity's agent.
However, if you give a stock certificate to your agent or to
the issuing
corporation for transfer to the name of the charity, your
gift is not completed
until the date the stock is transferred on the books of the
corporation.
Promissory
note.
If you issue and
deliver a promissory note to a charitable organization as a
contribution, it is
not a contribution until you make the note payments.
Records To Keep
You must keep
records to prove the amount of the contributions you make
during the year. The
kind of records you must keep depends on the amount of your
contributions and
whether they are:
·
Cash
contributions,
·
Noncash
contributions, or
·
Out-of-pocket
expenses when donating your
services.
Volunteer
Deductions
If you
volunteer with a qualified organization like Giving Spirit,
you may deduct the
costs of gas and oil that are directly related to getting to
and from the place
where you are a volunteer. If you do not want to figure your
actual costs, you
can deduct 14 cents for each
mile.
How
To Report
Report your
charitable contributions on lines 16 through 19 of Schedule
A (Form 1040).
If you made noncash
contributions, you may also be required to fill out parts of
Form 8283.
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