By Michael Aston, E.A.
Alhambra Tax Center
We claim charitable deductions on Sch-A (Itemized Deductions). In order to itemize, your total charitable donations should exceed the standard deduction. If the taxpayer does not itemize their deductions, then no charitable deduction can be claim as a donation. Unless, of course, the total charitable donation is greater than your standard deduction.
Did that confuse you? If so, please blame the IRS.
If you contribute cash, the organization should send a letter with their charitable tax identification (ID number) and stating the amount donated.
Non-Cash donations can be a deduction as long as the value of the item donated is valued at the Fair Market Value (FMV) and you received a signed receipt from the organization. In addition, the FMV in excess of $500.00 have additional record requirements.
Noncash items under $500.00:
If you donated old cloths to goodwill, which cost you $500.00 but the current FMV was only $75.00 -- you can only claim a $75.00 deduction.
Noncash items over $500.00:
You will need to fill out IRS Form 8283 requesting the name of the organization, a description of the donated property, purchasing information, and how you obtained the FMV.
If an Electrician donates their services and fixes electrical problems at a charitable event, the time spent fixing the problem is NOT deductible. The same goes for someone who donates his or her time at a charitable event: the volunteer time is not deductible. However, they would be able to deduct volunteer mileage to and from the location and any unreimbursed parts and supplies used at the organization event.
Mileage to and from charitable organizations are deductible at $0.14 per mile.
Since it is an election year, you should know the contributions made to political candidates and political organizations are NOT a tax deduction.
Here is a story before I go on my personal vacation, which is NOT a tax-deductible expense:
I was at a banquet and the organization was auctioning off themed baskets. The announcer continually claimed the winning bids would be fully tax-deductible. This was incorrect information because only the amount, which exceeded the product value, is deductible. For example: if the winning bid for the basket was $150.00 and the value of the contents in the basket was $100.00 -- only $50.00 would be eligible as a charitable deduction.
(To get more information about what is a qualified charitable donation, consult a tax professional or you can read Publication 526 from the IRS website.)
(If you want to know if your charitable organization is a tax-deductible entity, go to www.irs.gov and type in the search “non-profit tool.” This tool will give you a list of the IRS recognized tax-exempt entities.)