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.
