While we know you don’t give to charitable groups for the write-offs, we wanted to help you make sure you get the tax deductions you deserve. So this month our “Ask an Expert” contributor, Lori Henert, CPA, shared how contributions can work in your favor when tax time comes around.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 14 cents per mile driven in service of charitable organizations.
Out-of-Pocket Expenses in Giving Services
Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:
- Unreimbursed,
- Directly connected with the services,
- Expenses you had only because of the services you gave, and
- Not personal, living, or family expenses.
Cash Contributions
Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction.
You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following.
- A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include:
- A canceled check,
- A bank or credit union statement, or
- A credit card statement.
- A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.
You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records.
If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions.
Amount of contribution. In figuring whether your contribution is $250 or more, do not combine separate contributions. For example, if you gave your church $25 each week, your weekly payments do not have to be combined. Each payment is a separate contribution.
If contributions are made by payroll deduction, the deduction from each paycheck is treated as a separate contribution.
If you made a payment that is partly for goods and services, as described earlier under Contributions From Which You Benefit, your contribution is the amount of the payment that is more than the value of the goods and services.
Acknowledgment. The acknowledgment must meet these tests.
1. It must be written.
2. It must include:
- a. The amount of cash you contributed,
- b. Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits),
- c. A description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and
- d. A statement that the only benefit you received was an intangible religious benefit, if that was the case. The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. An example is admission to a religious ceremony.
3. You must get it on or before the earlier of:
- a. The date you file your return for the year you make the contribution, or
- b. The due date, including extensions, for filing the return.
If the acknowledgment does not show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution. If the acknowledgment does show the date of the contribution and meets the other tests just described, you do not need any other records.
Animal Rescue Foundation – IL is a registered 501(c)(3) non-profit organization in the United States so your donation may be tax deductible.
Our thanks to this month’s “Ask and Expert” contributor, Lori Henert, CPA of LTH Accounting & Tax Services, P.C.
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