Tag: charity

Why You Need an Appraisal Before You Donate Property

If you wish to donate noncash property valued at more than $5,000 to a charitable organization, you’ll generally have to obtain a qualified appraisal that meets IRS guidelines. An appraiser typically will use an item’s fair market value (FMV) as the basis for valuation. FMV is the price the property would sell for on the open market has given a willing buyer and a willing seller, no compulsion to buy or sell, and a reasonable knowledge of the relevant facts.

You’ll be responsible for providing the IRS with information that supports your right to deduct the charitable contribution. In most cases, this will be an “appraisal summary” on an IRS form attached to your tax return. You’ll have to attach a copy of the appraisal for gifts of art valued at $20,000 or more and for all gifts of property valued at more than $500,000, not including inventory, publicly traded stock, and intellectual property.

If you make gifts of two or more items in the same tax year — whether to one or multiple donees — the values of all property in the same category should be added together to determine if the $5,000 limit is exceeded.

The appraisal must be received before your income-tax return is due. It must be signed, dated, and made no earlier than 60 days before you donate the appraised property.

Qualified Appraisal Requirement: The Exceptions

Certain contributions don’t require a qualified appraisal. These include:

A car, boat, or airplane for which the deduction is limited to the charity’s gross proceeds on the property’s sale

Stock in trade, inventory, or property held primarily for sale to customers in the regular course of business

Publicly traded securities for which market quotations are readily available

The qualified intellectual property, such as a patent

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

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Substantiation Requirements for Donating to Charities

If you plan to help a charity by donating clothing or household items* and help yourself to a tax deduction, pay close attention to the tax law’s substantiation requirements. Otherwise, the IRS could disallow your deduction.

Property < $250

When you donate items valued at less than $250, you’ll need a receipt from the charity. If that isn’t practical (such as when you take items to a drop box), you must create your own reliable written record. Include the name of the organization you donated to, the date and location of your donation, a description of each item, and an explanation of how you arrived at its value.

Property > $250

If the value of your gift is $250 or more, you need a “contemporaneous” written acknowledgment from the charity that describes the donated property and says whether you received anything of value in return. If you did, the charity must provide a description and good-faith estimate of the value of the goods or services provided.

Property > $500

If your gift is valued at over $500 — or you donate similar items of property valued at more than $500 in aggregate — you must document the date (approximate) and manner in which you acquired the property, a description, your cost or other basis, the property’s fair market value (FMV) when donated, and the method used to determine FMV. Very large donations (more than $5,000 for one item or a group of similar items) require a qualified appraisal and an appraisal summary for attachment to your return.

Connect with our team today for all the latest and most current tax rules and regulations.

* Note that clothing and household items generally must be in good used condition or better.

 

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What is the Tax Benefit of Your Charitable Gifts

’Tis the season for charitable giving. Nonprofits generally send out appeals this time of year in the hope that people will (a) feel charitable around the holidays and (b) want to make a contribution before the tax year ends on December 31.

 

If you plan to make a donation, review the following so you don’t miss out on the charitable contribution tax deduction.

 

  • The charitable contribution deduction is available only if you itemize deductions on your return.

 

  • Assuming all requirements are met, donations to qualified organizations are deductible on your tax return if you charge them on your credit card or mail the checks by December 31.

 

  • You must be able to substantiate your donations for tax purposes. For monetary gifts, you need a written acknowledgment from the charity or a bank record that shows the name of the charity, the amount donated, and the date.

 

  • If you receive a benefit from the organization (dinner at a fundraising event, for example) in exchange for a contribution of more than $75, the charity must provide a written statement indicating the actual value of the benefit. You’re generally required to subtract that value from the amount you contributed to figure your deduction.

 

  • When you make a single donation of $250 or more, you need a written acknowledgment from the charity indicating how much cash you contributed and/or a description of any property you gave.

 

  • If the amount of your deduction for all noncash gifts is more than $500, you’ll need to file Form 8283 (Noncash Charitable Contributions). A gift of property valued at over $5,000 generally requires a professional appraisal. (Additional rules apply.)

 

  • If your charitable gift is serving as a volunteer, the value of your time is not deductible. However, out-of-pocket costs related to your services may be. Keep reliable records so you can substantiate expenditures.

 

To learn more about tax rules and regulations for charity donations, give us a call today. Our knowledgeable and trained staff is here to help.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Tax Regulations when Donating a Vehicle to Charity

Got an old car you’re thinking of donating to charity to take a tax deduction? Check out the IRS rules first. Here’s a quick overview.

 

  • The maximum amount you can deduct is the fair market value of the car.

 

  • If the claimed value is more than $500, your deduction is generally limited to the actual proceeds from the organization’s sale of the vehicle.

 

  • The “significant intervening use” exception allows you to claim a deduction for the full fair market value when the charity uses the vehicle in its mission prior to selling it.

 

  • You can also claim a fair market value deduction if the charity sells the vehicle to a needy individual for a price that’s significantly below market value (or gives it away).

 

  • The organization receiving the vehicle must be a registered charity.

 

  • You must itemize deductions on your federal income-tax return to claim the deduction.

 

  • You must include Form 8283 with your return when the claimed value is more than $500.

 

To learn more about tax rules and regulations for donations, give us a call today. Our knowledgeable and trained staff is here to help.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Getting the Most from Your Year-End Donations

During the holiday season, many people look for ways to give to those who are less fortunate. If you plan to give to charity before year-end and want to make the most of the tax benefits, consider the following.

Donate Clothing and Household Items

Any clothing or household items you donate must be in good used condition or better to be deductible. However, you don’t have to meet this standard if the item is worth more than $500 and you include a qualified appraisal with your return. Make sure you receive a written acknowledgment from the charity for all gifts worth $250 or more. Among other things, it should include a description of the contributed items.

Give Money

If you donate money, you must have a bank record or a written statement from the charity to deduct the contribution. The record must show the name of the charity, the date and the amount of the contribution.

Donate Appreciated Securities

If you have securities that have appreciated in value, donating the securities directly to a charity generally allows you to deduct the full fair market value of the securities but avoid paying tax on the appreciation.

Time Your Contributions

You can deduct charitable contributions in the year you make them.

Keep These Tax Tips in Mind

You can only deduct gifts you give to qualified charities, including religious organizations. And to deduct charitable contributions, you must itemize your deductions. If you claim the standard deduction, the charitable deduction is not available to you.

Talk with the Professionals

Consult with your financial, legal and tax professionals to learn more about making year-end charitable contributions that coordinate with your estate and tax strategies.

Connect with our team today for all the latest and most current tax rules and regulations.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

What You Need to Know About Charitable Gift Annuities

With a charitable gift annuity, you make an irrevocable transfer of cash, securities, or other property to the charity offering the program. In return, the charity promises to pay you or another individual (or both) a guaranteed income for life. Keep in mind that once you donate money, it belongs to the charity.

You can decide to have annuity payments start immediately or deferred until a later date. These payments are made from the organization’s general assets, not just the assets that you have transferred. When the last annuitant dies, any of your remaining assets typically go to the charity for its general use. Since the annuity is backed by the general assets of the charity, it’s a good idea to check out the charity’s track record and financial stability.

Gift from the Tax Man
Charitable gift annuities can provide a number of tax advantages. The portion of the transfer that is considered a charitable gift qualifies for an immediate income-tax charitable deduction. The deduction is generally equal to the difference between the value of the transferred assets and the present value of the annuity, determined according to IRS tables and other factors.

You also may be able to exclude a portion of each annuity payment from your gross income for income-tax purposes. If you transfer appreciated property to the charity, you may report the resulting capital gain ratably over your life expectancy, provided certain requirements are met. A charitable gift annuity also could have gift-and estate-tax implications.

Don’t deal with tax issues on your own. Call us right now to find out how we can provide you with the answers you need.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

What to Know at Tax Time when You’ve Made a Charitable Donation

Your donation to a tax-exempt organization supports two good causes: the charity’s mission and your wallet (in the form of a charitable tax deduction). Just be careful at tax time.

If you receive something of value in return for your donation — dinner, goods or services, tickets to an event, etc. — only the net amount is deductible. Example: If you donate $100 and receive dinner worth $40, the deductible amount is $60.

There are some exceptions. In 2016, you can deduct the full amount if:

> The items you received were free, you did not order them, and the cost was no more than $10.60.

> Your gift was at least $53 and you received only token items with the charity’s logo (e.g., bookmarks, key chains, calendars, etc.) that cost no more than $10.60.

> The benefits received are worth less than 2% of your contribution and no more than $106.

Charities are required to acknowledge in writing the value of goods or services provided for contributions of more than $75.

To learn more about tax rules and regulations for charitable donations, give us a call today. Our knowledgeable and trained staff is here to help.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).