Charity Benefit or Event
Have you attended a charity benefit or event lately? You may be able to deduct the dollar amount that is more than the fair-market-value of the event. For example, you attend a dinner for a qualified non-profit organization and your ticket price is $65. If the regular price of the meal would have been $10, your contribution amount would be $55.
Date of Contribution
You may usually deduct charitable contributions only in the year that you actually make them. A check that you mail is considered delivered on the date you mail it. A contribution charge on a credit card is deductible in the year you make the charge. The amount of your deduction may be limited, depending on the type of property given and the type of organization to which it is given. Some contributions that you are not able to deduct in the current year because of adjusted gross income limits may be carried over to future years.
As you consider making charitable contributions to assist natural disaster victims, keep in mind that you can deduct your contributions only if you make them to a qualified organization.
If you have an American or foreign exchange student living in our home, you may be able to deduct up to $50 per month as a charitable deduction on Schedule A. You must have a written agreement from a qualified organization that provides the student program. The student must not be a relative and must be a full-time student at the high school level or below.
Fair Market Value
Extra tax deductions may be as close as your closet. If you donated clothing, toys, furniture, or other household items to charity, you are allowed to deduct the fair market value of your donated items. All goods donated must be in good condition to be eligible for a tax deduction. The IRS does not provide a guide to determine the fair market value. The IRS suggests surveying thrift and consignment stores for similar items to provide an indication of the fair market value.
Not every donation you make to a worthy cause is deductible as a charitable contribution. If you gave money to an individual in need, or to an organization and specified that the contribution was for an individual, you are not allowed to deduct the amount given. When you donate to non-qualified organizations, such as civic leagues or social clubs, you cannot take a tax deduction.
You can ask any organization whether it is a qualified organization, or you can investigate by calling the IRS (toll-free) at 1-877-829-5500 or by checking the Exempt Organizations on the IRS Web site. Churches and governments are usually qualified organizations even though they are not included in the Exempt Organization database. The IRS has determined that donations made via a phone text are deductible if the charity is a qualified organization.
If you contributed to a church or qualified nonprofit organization, these contributions can be deducted as an itemized deduction on Schedule A. The IRS requires you to keep a written acknowledgement from the church or organization for any contribution. Contributions must be substantiated either with a bank record or a written communication from the donee organization.
If you donate a vehicle that has a fair-market-value over $500, your deduction depends on what the charity does with the vehicle. For example, if the charity immediately sells the vehicle, your deduction may be limited to the gross proceeds from the sale. Also, substantiation requirements are stricter than with other charitable contributions. Charitable contributions are deducted on Schedule A.