DEDUCTIONS
 

Contribution to Charitable Organization
 
  1)Contribution to 50% limit Organizations
  • Cash Contributions
  • Non Cash Contributions
  • Charitable Miles Deduction
2)Contribution to Other Charitable Organization

3)Contribution Carryover
CHARITBALE CONTRIBUTION
 
Can I deduct charitable contributions on my tax return?
When making charitable contributions to qualified organizations, a tax deduction is generally available for those charitable contributions for taxpayers who itemize tax deductions on their tax return, provided, in most cases, the total tax deduction on the taxpayer's tax return does not exceed ½ of the taxpayer's Adjusted Gross Income. Excess tax deductions for charitable contributions may be carried forward to future tax returns for five tax years.
You can deduct your charitable contributions on your tax return only if you make the charitable contributions to a qualified organization. To become a qualified organization and accept tax deductible charitable contributions, most organizations other than churches and governments, as described below, must apply to the IRS.
 

Charitable Contributions - IRS Publication 78.
You can ask any organization you intend to make charitable contributions to whether it is a qualified organization, and most will be able to tell you. Or you can check Publication 78 prior to making a charitable contribution, which lists most qualified charitable organizations. You may find Publication 78 in your local library's reference section. If not, you can call the IRS tax help telephone number shown for your area in your tax package to find out if a charitable organization is qualified to accept tax deductible charitable contributions.

 
Charitable Contributions You Cannot Deduct on Your Tax Return
Charitable contributions you cannot deduct on your tax return at all include charitable contributions made to specific individuals, political organizations and candidates, the value of your time or services and the cost of raffles, bingo, or other games of chance. You cannot deduct on your tax return charitable contributions that you give to qualified charitable organizations if,as a result, you receive or expect to receive a financial or economic benefit equal to the charitable contribution.
Although you cannot deduct on your tax return the value of your time or services, you can deduct on your tax return the expenses you incur while donating your services to a qualified charitable organization. If the expenses are for travel, which may include transportation and meals and lodging while away from home, they may be deducted on your tax return only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Actual costs of gas and oil can be deducted on your tax return, or you can choose to take 14¢ per mile for using your own car. For more information see, IRS Publication 463, Travel, Entertainment, and Gift Expenses.

Charitable organizations must provide donors with contemporaneous written acknowledgment of all charitable contributions valued at $250 or more. Donors are responsible for requesting this substantiation of the charitable contribution from the charitable organization. In addition, charitable organizations must disclose the value of any benefits provided when a charitable contribution of more than $75 includes some benefit (e.g., a fund-raising dinner or entertainment). The value of the goods or services received is not tax deductible on your tax return.

 
Charitable Contributions - Canadian charities
.To deduct your charitable contribution to a Canadian charity, you generally must have taxable income from sources in Canada. See IRS Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your tax deduction on your tax return.
 
Charitable Contributions - Mexican charities.
You may be able to deduct on your tax return charitable contributions to certain Mexican charitable organizations under an income tax treaty with Mexico. To deduct your charitable contribution to a Mexican charity on your tax return, you must have taxable income from sources in Mexico. The charitable organization must meet tests that are essentially the same as the tests that qualify U.S. charitable organizations to receive tax deductible charitable contributions. The charitable organization may be able to tell you if it meets these tests. If not, you can get general information about the tests the charitable organization must meet by writing to the:
 Non Cash Contributions
 
I donated a used car to a qualified charity. I itemize my deductions, and I would like to take a charitable contribution for the donation. Do I need to attach any special forms to my return? What records do I need to keep?
If you claim a deduction on your return of over $500 for all contributed property, you must attach a Form 8283 (PDF), Non-cash Charitable Contributions, to your return. If you claim a total deduction of $5,000 or less for all contributed property, you need only complete Section A of Form 8283 (PDF). If you claim a deduction of more than $5,000 for an item or a group of similar items, you generally need to complete Section B of Form 8283 (PDF) which requires, in most cases, an appraisal by a qualified appraiser.
You will need to obtain and keep evidence of your car donation and be able to substantiate the fair market value of the car. If you are claiming a deduction of $250 or more for the car donation, you will also need a contemporaneous written acknowledgement from the charity that includes a description of the car and a statement of whether the charity provided any goods or services in return for the car and, if so, a description and estimate of the fair market value of the goods or services.

For more information on these requirements, refer to Publication 526, Charitable Contributions, Publication 561, Determining the Value of Donated Property; Form 8283, Non cash Charitable Contributions; and its instructions, and Tax Topic 506, Contributions.
 
I would like to take a charitable contribution for the donation of my used car. What records do I need to keep?
You will need to obtain and keep evidence of your car donation and be able to substantiate the fair market value of the car. If you are claiming a deduction of $250 or more for the car donation, you will also need a written acknowledgement from the charity that includes a description of the car and a statement of whether the charity provided any goods or services in return for the car and, if so, a description and estimate of the fair market value of the goods or services.
 
Can I deduct non cash charitable contributions on my tax return?
Generally, non cash charitable contributions from individuals to charitable organizations (including most schools) are tax deductible on your tax return at fair market value to the extent of their tax basis purchase price less depreciation.
 
What are non cash contributions?
Non cash contributions are contributions in kind like stocks or bonds, art, equipment, clothing, furniture, cars, boats, airplanes or any other personal property or real estate.
 
What record is required to claim non cash contribution up to $500?
For non cash contributions under $250, you need to get a receipt from the charity showing its name, the date, and a reasonably detailed description of the property. You also need to keep records showing the property's fair market value, and its cost if it has appreciated in value.For non cash contributions of $250 to $500, you must get a written acknowledgement of your contribution from the charity, stating how much (if anything) you received in return for your gift.
 
What is fair market value?
Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
 
What objects are considered art?
Art includes paintings, sculptures, watercolors, prints, drawings, ceramics, antique furniture, decorative arts, textiles, carpets, silver, rare manuscripts, historical memorabilia, and other similar objects.
 
How do I determine the value of a donated item?
The value you should use is the fair market value: the amount that a willing buyer would pay to a willing seller if both parties knew all the facts.
 
What if my total art contribution deduction was $20,000 or more?
If your total art contribution was $20,000 you must attach a complete copy of the signed appraisal to your return. For individual objects valued at $20,000 or more, be sure to keep a photograph of a size and quality fully showing the object, preferably an 8 X 10 inch color photograph or a color transparency no smaller than 4 X 5 inches. It must be provided upon request.
 
When is it necessary to get an appraisal?
An appraisal is usually required when you donated an item (or a group of similar items) worth more than $5,000. You need not get an appraisal if the value of the item(s) is readily determinable, such as stocks or other securities. You must attach a copy of the appraisal to your return if you are claiming a deduction of more than $20,000 for donated art.
  Charitable Contributions - Types of Qualified Charitable Organizations
Generally, only the six following types of charitable organizations can be qualified charitable organizations and accept tax deductible charitable contributions.
  • The United States, a U.S. Possession, a state, city, or town, or Indian tribal government;
  • A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must be organized and operated only for the following purposes:
    • Religious,
    • Charitable,
    • Educational,
    • Scientific,
    • Literary purposes, or
    • For the prevention of cruelty to children or animals;
    • Certain organizations that foster national or international amateur sports competition also qualify;
  • Domestic non-profit veterans' organizations or auxiliary units;
  • A domestic fraternal group operating under the lodge system;
  • Nonprofit cemetery and burial companies (your charitable contribution must benefit the whole cemetery, not your burial plot);
  • Legal services corporations organized under the Legal Service Corporation Act.
 
Can I deduct non cash charitable contributions on my tax return?
Generally, non cash charitable contributions from individuals to charitable organizations (including most schools) are tax deductible on your tax return at fair market value to the extent of their tax basis (purchase price less depreciation). First, you should determine what the fair market value of the non cash charitable contributions is. If the value of the non cash charitable contributions are more than $250 you must have the non cash charitable contributions substantiated by a contemporaneous written acknowledgment. Generally, the acknowledgment must include the amount of cash and a description of the non cash charitable contributions, and a description and good-faith estimate of the value of any goods or services received for the non cash charitable contributions. If the values of the non cash charitable contributions are more than $500, you must fill out Section A of Form 8283, Non cash Charitable Contributions. If you make non cash charitable contributions of non cash property worth more than $5,000, generally an appraisal must be done. In that case, you also fill out Section B of Form 8283. Attach Form 8283 to your tax return.

For more information on this requirement, refer to IRS Publication 526, Charitable Contributions.
 
Charitable Contributions - Examples.
Qualified charitable organizations that can accept tax deductible charitable contributions include:
  • Churches, a convention or association of churches, temples, synagogues, mosques, and other religious charitable organizations,
  • Most nonprofit charitable organizations such as the Red Cross and the United Way,
  • Most nonprofit educational charitable organizations, including the Girl (and Boy) Scouts of America, colleges, museums, and day-care centers if substantially all the child care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. However, if your charitable contribution is a substitute for tuition or other enrollment fee, it is not tax deductible on your IRS tax return as a charitable contribution, as explained next under Charitable Contributions You Cannot Deduct,
  • Nonprofit hospitals and medical research charitable organizations,
  • Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs,
  • Nonprofit volunteer fire companies,
  • Public parks and recreation facilities, and
  • Civil defense charitable organizations.
 
Can you carry over your contribution that you are not able to deduct in the current year because they exceed your AGI?
Yes, you can. You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time.
 
What is the percentage limit for the contribution you carry over?
Your total contributions deduction for the year for which you carry your contributions cannot exceed 50% of your adjusted gross income for that year. Contributions you carry over are subject to the same percentage limits in the year to which they are carried.
 
Can you adjust carried over contribution before adjusting your current year contribution?
No, for each category of contributions, you can deduct carryover contributions only after deducting all allowable contributions in that category for the current year.
 
Can you change limit of percentage in case of carryover of capital gain property?
Yes, you can carry over contributions of capital gain property subject to the 30% limit and you can choose in the next year to use the 50% limit. You must refigure the carryover and take appreciation in to account. You reduce the fair market value of the property by the appreciation and reduce that result by the amount actually deducted in the previous year.