Tag: donations

Taxes and Charitable Donations – What You Need to Know

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. 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).v

The Ins and Out of Donating Stock to a Charity

What could be sweeter than helping out your favorite charity and snagging a tax deduction to boot? But giving cash isn’t your only option. Donating stock or mutual fund shares that have appreciated in value since you acquired them may be a tax-smart move.

When you donate securities you’ve held for longer than one year, you generally can claim an income-tax deduction in the amount of their fair market value. And, since you’re not selling the shares, you won’t have to realize the gain or pay capital gains tax on the appreciation. Although you could donate securities with unrealized short-term gains, your deduction would typically be limited to your cost basis.

Keep in mind that charitable gifts are deductible only if you itemize deductions on your income tax return. Your tax advisor can give you more information.

Give us a call today, so we can help you determine the right course of action for you.

 

…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).v

What are Substantiate Charitable Contributions

If you want to take a charitable contribution deduction on your income tax return, you need to substantiate your gifts. You must have the charity’s written acknowledgment for any charitable deduction of $250 or more. A canceled check alone isn’t enough to support your deduction.

It’s your responsibility to obtain the charity’s acknowledgment (receipt), and you need to have it when you file your return. The acknowledgment must include:

– The amount of cash you contributed

– A description of any property you gave

– A statement as to whether the charity provided services or goods (a meal or tickets, for example) as full or partial consideration for your donation, plus a description and good faith value estimate of the services or goods

A charity may acknowledge each gift of $250 or more separately, or it may give you a single statement covering all your gifts. The charity does not have to place a value on the property you donate. That’s still up to you.

Also, a charity must provide you with an acknowledgment for a donation of more than $75 that is partially a contribution and partially in exchange for goods and services from the charity. This acknowledgment must:

– Tell you that your deductible contribution amount is the donation minus the value of the goods or services

– Give you a good faith estimate of the value of the goods or services

IRS regulations on substantiating charitable deductions cover two more contribution types:

– Goods Or Services That Don’t Have Substantial Value

A charity doesn’t have to include token items in its acknowledgment. Examples of these items include posters, mugs, and key rings.

– Payroll Deduction Contributions

Donations that employers make on behalf of employees who have signed payroll deduction authorization cards can be a problem because the charity lacks the individual donor information needed to prepare its acknowledgments. To substantiate these payroll deduction contributions, you can use employer documents that show the amount withheld (payroll stubs, W-2 forms, or other employer reports) plus the charity’s pledge card or other documents with a statement that you received no goods or services in exchange for your contribution.

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.

…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).v

What are the Deductions for Charitable Donations

If your contributions to charity begin and end with check writing, you may be missing out on some satisfying volunteer opportunities — and a few tax deductions. IRS rules allow you a number of tax breaks for contri­butions other than cash that you make to qualified organizations.

 

Deduct Getting There and Back

 

You can deduct the costs of going to and from a location where you volunteer your services. You can also deduct the costs of driving for the organization — for example, to pick up or deliver items. To compute your deduction for charitable driving, use a standard mileage rate of 14 cents per mile or deduct the actual cost of your gas and oil. Either way, parking fees and tolls are also deductible.

 

Recoup Your Expenses

 

Out-of-pocket expenses you pay in giving services to a qualified organization may count as a charitable donation if you’re not reimbursed for them. You cannot deduct your personal expenses, such as child-care costs, even if they are necessary for you to volunteer. You may, however, deduct the costs of buying and cleaning a uniform you’re required to wear while volunteering if it is not suitable for everyday use.

 

No Time To Volunteer?

 

Many charities accept noncash donations. Giving investments that have increased in value can be a smart tax move. Instead of selling the investment and paying capital gains tax, give it to a qualified organization. If you held the investment for more than one year, you generally can deduct its fair market value at the time of the donation. Remember that you’ll need a receipt from the organization to claim a tax deduction and other records also may be required.

 

Some Restrictions

 

Contributions must be made to qualified organizations that meet IRS guidelines. Not sure? The IRS has an online tool (Exempt Organizations Select Check) on its website (www.irs.gov). Or call the IRS at 1-877-829-5500.

 

Things you can’t deduct include contributions to a specific individual; the value of your time or services; personal expenses incurred while volunteering, such as the cost of meals (unless you must be away from home overnight); and appraisal fees to determine the value of donated property.

 

Connect with us today for more information on charitable donations.

 

…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).

Do You Need a Donor Advised Fund?

Are you looking for a different way to give to your favorite charities? If you are, you may want to consider a donor-advised fund.

Donor-advised funds are a popular option because they offer several attractive benefits: relatively modest contribution guidelines, little to no set-up costs, few ongoing responsibilities, name recognition if desired, and the ability to consolidate contributions and thereby make a greater impact.

Fund Basics

With a donor-advised fund, you make a contribution (or series of contributions) to the fund and recommend how you would like your gifts to be disbursed. Generally, the donor’s recommendations will be followed, but the sponsoring organization has the final say as to how the money is actually distributed.

Tax Benefits

As the donor, you can potentially take advantage of these tax breaks:

  • An immediate deduction that reduces your federal taxable income (subject to certain tax law limitations)
  • Avoidance of capital gains taxes on appreciated assets you donate directly to the fund
  • A reduction in the value of your estate, potentially saving future estate taxes

Do Your Research

If you are interested in setting up a donor-advised fund, do your homework. Ask the sponsoring organization what types of assets it will accept. Funds also may have minimum contribution requirements to establish a named fund. Make sure you understand what restrictions apply to grants, what fees are involved, and what services are offered to help donors. And find out whether the fund will continue in perpetuity or end when you die.

To learn more about Donor-advised funds, give us a call today. Our staff of professionals is always happy 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).

What You Need to Know about Documenting Your Donations

Individual taxpayers may deduct their charitable gifts as an itemized deduction for income-tax purposes. However, the IRS has very specific requirements when it comes to documenting contributions.

The Basics

You cannot deduct any contribution of cash, check, or other monetary gift unless you maintain, as a record of the contribution, a bank record or a written communication from the charity showing its name, plus the date and the amount of the contribution. For noncash donations, you need a receipt and a record showing the charity’s name and a description of the gift.

If the value of any gift equals $250 or more, you also need a contemporaneous written acknowledgement from the charity stating the amount of any donation made by cash (or check); a description of any property other than cash; and a statement of whether the charity provided any goods or services in exchange for the gift and, if so, a description and a good faith estimate of the value.

Noncash Contributions Greater Than $500

The general rules for noncash contributions are the following:

For contributions of $500 to $5,000, the donor must attach a description of the donated property to the tax return

For contributions of $5,000 to $500,000, the donor must attach a “qualified appraisal” to the tax return, along with additional information about the property and the appraisal

For contributions of more than $500,000, the donor must attach a qualified appraisal to the return

Additional rules apply for contributions of motor vehicles, boats, and airplanes if the donation’s claimed value exceeds $500.

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

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.

…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).

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.

 

…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 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).

How to get the Most Benefit Out of Your Donation

Many people want to help worthy causes. You may decide to lend your support to one or more of your favorite nonprofit organizations. Making your gifts before year-end can give you the opportunity to claim a tax deduction for your charitable contributions on your tax return.

 

Give to a qualified organization

 

To gain a tax deduction for your contribution, it must be made to a qualified organization. Among others, qualified organizations include nonprofit groups that are religious, charitable, educational or scientific in purpose. The IRS has an Exempt Organizations Select Check tool on its website (irs.gov) that can help you search for qualified organizations. Note that you can’t deduct contributions to specific individuals or to political organizations and candidates.

 

Itemize your deductions

 

Your charitable contributions are deductible only if you itemize your deductions (not if you claim the standard deduction). Once income exceeds a specified level, itemized deductions are reduced.

 

Deduct the fair market value of donated property

 

If you donate stock or other noncash property, it usually will be valued at its fair market value for tax-deduction purposes. Donations of used clothing and household items are usually valued for less than the price you paid for them.

 

Pay attention if you receive a benefit

 

If you receive merchandise, tickets to a sporting event or other goods and services because of your contribution, you only can deduct the amount of your contribution that exceeds the value of the benefit you received.

 

Get a receipt

 

To deduct a contribution of any amount, you must maintain a bank or payroll deduction record or a written communication from the organization showing the organization’s name and both the date and amount of the contribution. For a contribution of $250 or more, you will need a contemporaneous written acknowledgment from the organization containing specific information.

 

Learn more

 

Look for additional details on the IRS’s website and consult your tax advisor. To discuss how you might include charitable giving in your estate strategy, please give us a call today.

 

…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).