The Season For Giving – Charitable Contribution Tax Rules

Photo by Aaron Burden on Unsplash

I’ve always had a soft spot in my heart for smaller non-profits that use their grass roots activism to help those in need.  One of my favorites has been LA on Cloud9, their mission is “Helping the Homeless and Animals In Need.”  They help Los Angeles’ homeless by providing supplies, blankets and tents trying to make their situation a bit more tolerable and by helping take care of their pets.

This year, my favorite charitable organization, Peticular Partner, is sponsoring a drive to collect and donate pet supplies and pet food for LA on Cloud 9.  We are collecting old blankets and collars, leashes, pet toys, snacks, etc to be handed out by LA on Cloud 9 to support the homeless pets.  You can send them or drop them off to our Burbank office or our Riverside Drive mailing address.  Alternatively, we’ve set up an Amazon wish list for Peticular Partner at Smile.Amazon.  All items will be delivered to LA on Cloud 9 before Christmas.  Any help we can get is always appreciated.

This year, the maximum charitable contribution limit is for the most part, 60% of Adjusted Gross Income.  For most this will not be a problem, but if you do somehow exceed this giving limit your excess can be carried to the following year.

One of the most commonly broken rules of deducting charitable contributions is that all monetary donations must have a receipt or at least a cancelled check or credit card statement proving the donation was made and when.  However, if any single contribution is $250 or greater you must get a contemporaneous receipt indicating

  • the amount of the contribution,
  • a statement that no goods and services were received in exchange for the deductible amount,
  • and the date.

Another commonly asked question is whether donations to help individuals, or through GoFundMe accounts are deductible.  Unfortunately, only donations made to a IRS recognized 501c3 organization are deductible.  If the GoFundMe or similar fundraising page is sponsored by the 501c3 and the monetary donations are received by them directly, they are more than likely charitable organizations.

Finally, non-cash donations are always a great source to help those in need, decluttering your home and possibly getting a write off deduction on your tax return.  In order to deduct non-cash contributions you need:

  • an invoice/receipt from the charitable organization you donated to.
  • In addition you should have documented what you paid for the item and what the fair market value of the item was.  You can get guidance from thrift store prices, or ebay showing similar pricing.  Goodwill also provides some worksheets to assist you in the calculations of fair market values.
  • Some clients find it helpful to take photos to keep with their receipts to remind them of what they gave away and to document the quality of the donation.
  • If the value of your donation is between $500 and $5000 you need a more detailed receipt naming generally what was donated.  Form 8382 must be included in any returns where non-cash donations are $500 or greater.
  • If your donation is $5000 or greater you will need a professional appraisal verifying the fair market value as well.

When donating your vehicle, if the car is valued at less than $500 you only need a receipt and verification of value for a full write off.  Over $500 be sure the charity issues you a 1098-C detailing what they sold the vehicle for.  You can only write off the amount they sold it for or the fair market value, whichever is less.  If the charity uses the vehicle for reasons that further their mission, your write off will be the fair market value.

If you have any further questions about your charitable deductions for this year feel free to contact us.

We’ll chat again soon!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close