Posts Tagged ‘tax deduction’

Lower Charitable Tax Deductions Reduce Incentive To Give

Tuesday, July 6th, 2010

A proposal worries nonprofits as lower charitable tax deductions might keep donors from giving the big bucks.
  • Nonprofits in New York City are anxious that a state budget proposal will be implemented that greatly reduces tax deductions for charitable donations.
  • The proposal is meant to bolster New York’s sluggish economy by allowing the 3,500 New Yorkers who earn more than $10 million a year to deduct only 25% of their charitable contributions – instead of the 50% it is now.
  • If the proposal passes, it could generate up to $100 billion for the state, but it will also greatly decrease the incentive for high-income New Yorkers to donate to charities.

Best Quote

“Any proposal that could possibly decrease private giving is going to be a disaster for all nonprofits in New York City and throughout the state. The state cannot balance the budget on the backs of those in need.” – Michael Stoller, Executive Director, Human Services Council

Why do you need to keep records of your charitable donations?

Wednesday, September 23rd, 2009

The government is prepared to award you tax deductions in return for your charitable donations, but it’s up to you to prove those donations were actually made. The IRS requires a great deal of documentation to ensure that all your donations are legitimate, so it’s essential to keep good records and make sure your chosen charities received everything you gave them. The specific requirements for tax deductions are as follows.

If your donation was money, you need to provide a credit card statement, canceled check, or bank statement that details how much, when, and to whom you donated, as well as written acknowledgment from the charity of how much you paid them and when. If your donation was more than $250, the acknowledgment letter should also include whether the charity gave you anything in return for your donation, and if so, the approximate value of the services rendered.

Property donations also get you tax deductions, but the records you keep have to be much more detailed. Every property donation can be tax deductible only if at least the following records are provided: the name and address of the charity, the date of the donation, a description of the property and its location, an estimated value for the property and how you arrived at that number, and the amount you want to be paid as a tax deduction. If the property is worth more than $250, there are even more rules:

  • For property donations from $250-$500, you also need an acknowledgment letter from the charity.
  • From $500-$5,000, you must document how and when you acquired the property, as well as how much it cost you.
  • If you estimated the property’s value at more than $5,000, you need a qualified appraiser to verify your estimate.

It’s important to keep records of all of the above, as well as any additional documents that can help prove you actually made the donation. If any piece is missing, you probably won’t get any money back.

A Tax-Deduction is…

Tuesday, June 23rd, 2009

A tax-deduction is any expense that can be removed from your annual reported income, which reduces the amount of taxable income (also called adjusted gross income). People usually talk about this as “writing something off.” For example, any money donated to a 501c3 organization can be subtracted from your annual reported income.

Why would you donate your old car?

Monday, June 15th, 2009

Donating your used car is a win-win situation, and who doesn’t like to win?

If you have a car just sitting in the driveway that may not be worth the hassle of selling, donation is a very good option. Many different kinds of charities accept cars – even if they don’t use the cars themselves, they can sell each vehicle at auction and keep the profit as a monetary donation. If you don’t want to go through a big charity, you can look around in your community and think about where a donated car could make a difference.

Not only will you get the great feeling of helping out a person or an organization in need, but there’s a simple incentive for you as well: donations to many charities are tax-deductible, which means you may be able to write off the value of your automobile donation and save money on your taxes this year!