While we believe at Giving Center that your primary motivation to donate to charity should be altruism, we also think you should know that great tax benefits exist for those who give. Here are some of the rules and benefits you should know about.
- A gift to Giving Center may entitle you to a charitable contribution deduction against your income tax if you itemize deductions. You must itemize in order to take a charitable deduction. Make sure that if you itemize, your total deductions are greater than the standard deduction. If they’re not, stick with the standard deduction.
- A deductible in the year in which it is paid. Putting the check in the mail to the charity constitutes payment. A contribution made on a credit card is deductible in the year it is charged to your credit card, even if payment to the credit card company is made in a later year. Giving Center accepts a variety of financial donations, for more information visit us here.
- There are limits to how much you can deduct, but they’re very high. For most people, the limits on charitable contributions don’t apply. Only if you contribute more than 20% of your adjusted gross income to charity is it necessary to be concerned about donation limits. Under the new tax law, if the contribution is made to a public charity, the deduction is limited to 60% of your contribution base. For example, if you have an adjusted gross income of $100,000, your deduction limit for that year is $60,000.
The rules on 20% limits and 30% limits are way too complicated to delve into in this space. If you give an amount in excess of the applicable limitation to charity in one year, the excess is carried over for the next five years.
- Rules exist for non-cash donations. If you contribute property owned for more than one year, the value of the deduction is normally equal to the property’s fair market value. You have an advantage when you contribute appreciated property because you get a deduction for the full fair-market value of the property. You are not taxed on any of the appreciation, so, in effect, you receive a deduction for an amount that you never reported as income.
- You need to maintain proper documentation of your contributions. If you want to claim a charitable deduction for a cash gift, then you must be prepared to verify your claim. In other words, you cannot deduct the spare change dropped in a charity’s collection bucket without the proper documentation. If you are audited, the IRS will only accept one of the following to substantiate a monetary gift: a canceled check, credit card statement, bank statement or a written acknowledgment from the charity. If you contribute $250 or more, then you must prove to the IRS that you (a) made the donation and (b) you didn’t receive anything in return for that donation. Therefore you’ll need a receipt from the charity that includes the following information: the charity’s name, the value of your gift, the date you made your donation and a statement verifying that you did not receive any goods or services in return for your gift.
- Donating a vehicle? If you donated a car worth more than $500, then you can only deduct the amount the charity received from the sale of your car. You can use the receipt from the charity to substantiate your claim. Do not attempt to use the fair market value unless one of the following conditions apply: (1) instead of selling the vehicle, the charity keeps and uses it, (2) the charity makes improvements to the car before selling it, (3) your car is sold at a discounted price to a person with a low income, (4) or if the car is worth less than $500. For more information on donating a vehicle please contact us here or give us a call (888)228-7320
- The IRA charitable rollover offers tax benefits for those that qualify. The IRA Charitable Rollover allows individuals who are 70 1/2 years old to donate up to $100,000 to charitable organizations directly from their IRA, without that donation being counted as taxable income when it is withdrawn. To qualify, contributions must come from a traditional IRA or Roth IRA, and they must be made directly to a qualified charitable organization such as Giving Center. Additionally, the donor may not receive goods or services in exchange for the donation, and they must retain a receipt from each charity to which a donation is made.
Remember, it’s always better to give than receive. The glory of charitable donations is that you give and receive at the same time.