Tax Deductions for Charitable Contributions
Usually taxpayers can deduct fully contributions of money to religious, educational or other qualified charitable organizations. Your annual charitable donation deductions may be reduced if they exceed certain limits based on your AGI, the type of donation and the type of charity receiving the donation. If you receive some benefit from the charity in connection with your donation, such as services or products, your deduction must be reduced by the value of the benefit you receive. Various substantiation requirements also apply. Taxpayers generally need an acknowledgement from the charity for cash donations of $250 or more, and an acknowledgement for all non-cash donations.
Cash. This includes not just actual cash but gifts made by check, credit card or payroll deduction. You may deduct 100%.
Ordinary-income property. Examples include stocks and bonds held one year or less, inventory, and property subject to depreciation recapture. You generally may deduct only the lesser of fair market value or your tax basis.
Long-term capital gains property. This might be stocks or bonds held more than one year. You may deduct the current fair market value.
Tangible personal property. Your deduction depends on the situation:
- If the property isn’t related to the charity’s tax-exempt function (such as an antique donated for a charity auction), your deduction is limited to your basis.
- If the property is related to the charity’s tax-exempt function (such as an antique donated to a museum for its collection), you can deduct the fair market value.
Vehicle. Unless it’s being used by the charity, you generally may deduct only the amount the charity receives when it sells the vehicle.
Use of property. Examples include use of a vacation home and a loan of artwork. Generally, you receive no deduction because it isn’t considered a completed gift. There may, however, be ways to structure the gift to enable you to get a deduction.
Services. You may deduct only your out-of-pocket expenses, not the fair market value of your services. You can deduct 14 cents per charitable mile driven.
IRA funds. If you are age 70½ or older, you can distribute up to $100,000 from your IRA directly to charity. No charitable deduction is allowed for any amount that would otherwise have been taxable, but you save the tax you would otherwise have owed on the distribution. Such a donation can help satisfy your required minimum distribution. This break expired Dec. 31, 2014, but now has been made permanent.
Tue, September 20, 2016