The Gift of Giving - Understanding the rules on taxes | Tax Tip of the Week | No. 58

In our current economic times, it can be difficult to choose how to spend your charitable dollars.  If you can take advantage of the tax benefits while supporting a charity or organization, you should be aware of the following.

• A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value in return.  For example, a donation of $25 while receiving a $5 item of value (ticket, admission, etc.) results in a $20 contribution, not a $25 one.  Your receipt from the organization should state whether or not anything of value was received in conjunction with the donation.
• An organization must qualify with the IRS for charitable purposes.  Some of the most common organizations that qualify include: Churches, synagogues, temples, mosques and other religious organizations; nonprofit schools and hospitals; public parks and recreation facilities; war veterans groups; Salvation Army, Red Cross, Goodwill, Boy and Girl Scouts; etc.Non-qualifying groups include: civic leagues; social and sports clubs; labor unions; chambers of commerce; foreign organizations (some exceptions); lobbying groups; homeowner’s associations; individuals; value of your time or service; cost of raffle, bingo or lottery tickets and several others.
• To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.  The amount of your deduction may be limited if certain rules and limits apply to you.  You must keep records to prove the amount of the contributions you make during in the year.  The kind of records you must keep depends on the amount of your contributions and whether they are cash, noncash or out-of-pocket expenses while donating your services.Note:  any charitable deduction you claim in excess of $250 requires that you have a written acknowledgement notice issued by the charitable organization.

For more information you can refer to IRS Publication 526 or give us a call.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our web site.Linda Johannes - this week's authorRick Prewitt - the guy behind TTW...until next week.