General facts on charitable tax
deductions when donating to a charity with 501(c)(3) exemption status.
Reminder: These are basic guidelines. Please consult
a tax specialist for specific information and updated laws and regulations.
What
is the definition of a charitable gift? A gift is
a voluntary transfer of money or property that is made with no expectation of a commensurate return. If a donor receives a
financial or economic benefit in return for making a gift, the payment is not a deductible charitable contribution except
to the extent that it exceeds the fair market value of the benefit.
Who may deduct charitable
contributions? Currently, only donors who itemize deductions
on their federal income tax returns may deduct their gifts to qualifying nonprofit organizations. However, legislation has
introduced acts that would extend the tax deduction for charitable donations to nonitemizers, so consult your tax specialist
for current laws.
Which organizations qualify as recipients of deductible
charitable contributions? Donors may deduct their gifts
to religious, charitable, scientific, educational and literary institutions and others that are incorporated as 501(c)(3)
organizations. Other organizations may apply. (For a complete list, please refer to Code Section 170(c)(2)(B) of the Internal
Revenue Code.)
Must a donor keep records in order to take a deduction
for a charitable contribution? Yes, and the record keeping
requirements vary according to the amount and type of gift. For contributions less than $250, the canceled check, credit card
or cash receipt will suffice. For contributions of $250 or more, the donor must obtain a "written acknowledgment"
from the charity, which must contain the date and amount of the contribution and a list of benefits (if any) received in return
with an estimation of their value.
What statements must the charity provide to the donor? Charities must provide donors with a written acknowledgment of all gifts of $250 or more
whether there is a return benefit. This acknowledgment must state whether or not the charity provided a return benefit and,
if a benefit was provided, include the required disclosure.
Can charitable contributions
be made with property instead of cash? Yes, but special
rules apply for determining the value of donated property, for the records that the donor must keep, for the documents that
must be filed with the IRS, and, in some cases, for the amount of the contribution that you can deduct.
Can a volunteer deduct the value of his or her services? No. Individual taxpayers may not deduct the value of their donated services.
Can
a volunteer deduct his or her expenses? Some expenses
incurred when volunteering services, for example, travel expenses, are deductible if they are not reimbursed by the charity.
However, travel expenses are deductible only if there is no significant element of personal pleasure, recreation, or vacation
associated with the travel.
IMPORTANT: Please contact your tax
specialist for specific information. The information provided here is only meant to be a guideline, not a complete account
of current tax laws and regulations.
