Donation Of A Car

Donation Of A Car Biography

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The taxpayer is allowed a certain amount of deductions each year for certain charitable contributions. In order to qualify, the taxpayer must consider all of the following factors (bolded items defined below):

The type of organization receiving the charitable contribution,

The type of contribution,

The limit on the amount of the contribution that can be deducted, and

What recordkeeping is required in regards to the contribution.

Type of Organization

The taxpayer may deduct contributions or gifts the taxpayer gave to qualified organizations, of which there are generally five categories as follows:

A community chest, corporation, trust, fund, or foundation organized or created under the laws of the United States, any state, or the District of Columbia or any possession of the United States (including Puerto Rico) for the following purposes: religious, charitable, educational, scientific, literary, or the prevention of cruelty to children or animals,

War veterans' organizations, including auxiliaries, trusts, or foundations organized in the United States or any of her possessions,

Domestic fraternal societies, orders, and associations operating under the lodge system used solely for the reasons listed in number one,

Certain nonprofit cemetery companies and corporations not used for the care of a specific lot or mausoleum crypt, and

The United States or any state, the District of Columbia, a U.S. possession, a political subdivision of a U.S. state or possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions used solely for public purposes.

Examples

Some examples of organizations of the type described above are as follows:

Churches, mosques, synagogues, temples, and other religious organizations

Boy Scouts, Boys and Girls Clubs of America, CARE, Girl Scouts, Goodwill Industries, Red Cross, Salvation Army, United Way

Nonprofit schools, hospitals, and organizations whose purpose is to find a cure for, or help people who have, arthritis, asthma, birth defects, cancer, cerebral palsy, cystic fibrosis, diabetes, heart disease, hemophilia, mental illness or retardation, multiple sclerosis, muscular dystrophy, tuberculosis, or other diseases

Utility company emergency programs, nonprofit volunteer fire companies, public parks and recreation facilities, and civil defense organizations

Verification of Charitable Status

To verify an organization’s charitable status, the taxpayer can do the following:

Check with the organization to which the taxpayer made the donation. The organization should be able to provide the taxpayer with verification of its charitable status.

Search for the charity's status by organization name and location at the IRS's Search for Charities page.

Contact the IRS Tax Exempt/Government Entities Customer Account Services at 1-877-829-5500. Assistance is available Monday through Friday from 8:00 a.m. to 6:30 p.m. EST.

Type of Contribution

Contributions can be in the form of cash, property, or out-of-pocket expenses paid by the taxpayer to do volunteer work, including mileages expenses.

Special Circumstances

There are special circumstances that apply to certain types of gifts as follows:

Gifts From Which the Taxpayer Benefits

If the taxpayer made a gift and received a benefit in return, such as food, entertainment, or merchandise, the taxpayer may generally only deduct the amount that is more than the value of the benefit. The organization is required to furnish the taxpayer with a statement as to how much of the contribution is charitable for contributions with benefits attached over $75. This rule does not apply to certain membership benefits provided in return for an annual payment of $75 or less which are listed in IRS Pub. 526, Charitable Contributions.

Example: The taxpayer paid $70 to a charitable organization to attend a fund-raising dinner and the value of the dinner was $40. The taxpayer may deduct only $30.

Expenses Paid for Student Living with Taxpayer

The taxpayer can deduct certain expense up to $50 a month for American and foreign students living in the taxpayer's home if all of the following requirements are met:

There is an agreement between the taxpayer and the qualified organization as part of a program to provide educational opportunities to the student,

The student is not a relative or dependent of the taxpayer, and

The student attends school full-time in the twelfth grade or lower at a school in the United States.

This deduction is not available in a mutual exchange program where the taxpayer's student goes to live with the exchange student's family.

Contributions of Property

Generally, the deduction available for the contribution of property is the property's fair market value at the time of donation. However, other rules apply if the property has appreciated in value or if the property has been depreciated. Also, a deduction is not available for household items or clothing unless the property is in good used condition or better, and special requirements must be met for the donation of a car, boat, or airplane. See Fair Market Value below and IRS Pub. 526, Charitable Contributions for more information on determining the deduction for different types of property.

Items that Cannot be Deducted

The following are a list of contributions the taxpayer cannot deduct:

Any amounts for which the taxpayer received a reimbursement

Any amounts which are set aside for a specific person

The fair market value of services or time the taxpayer contributes

Appraisal fees paid to evaluate the fair market value of donated property

Travel expenses (including meals and lodging) while away from home, unless there was no significant element of personal pleasure, recreation, or vacation in the travel

Cost of raffle, bingo, or lottery tickets (However, the taxpayer may be able to deduct these expenses on line 28 of Schedule A.)

Cost of tuition (However, the taxpayer may be able to deduct these expenses on line 21 or take a credit for these expenses on Form 8863.)

Value of blood or plasma

The transfer of a future interest in tangible personal property, generally, until the entire interest has been transferred

Gifts to foreign organizations (However, the taxpayer may be able to deduct gifts to certain U.S. organizations that transfer funds to foreign charities and certain Canadian, Israeli, and Mexican charities. See IRS Pub. 526, Charitable Contributions for details.)

Gifts to organizations engaged in certain political activities that are of direct financial interest to the taxpayer's trade or business

Gifts to political organizations or candidates

Gifts to groups whose purpose is to lobby for changes in the laws

Gifts to communist organizations

Gifts to homeowners' associations

Gifts to civic leagues, country clubs, fraternal orders social and sports clubs, labor unions, and chambers of commerce

Value of benefits received in connection with a contribution to a charitable organization

Limit on the Amount of the Contribution That Can Be Deducted If the taxpayer's total contributions for the tax year are 20% or less than the taxpayer's Adjusted Gross Income (AGI), there is no limit on the deduction available. If the total contributions exceed this amount, the taxpayer's contribution is limited to 50%, 30%, or 20% of the taxpayer's AGI depending on the type of organization(s) to which contributions are made. See IRS Pub. 526, Charitable Contributions to calculate the amount of the taxpayer's deduction if this is applicable.

Any nondeductible contributions resulting from excess amounts over the taxpayer's AGI may be carried over for the next five tax years.

Record Keeping

The taxpayer must keep records of all contributions used for tax deductions. The type of record which must be kept depends on the amount of the contribution and the type of the contribution as follows:

Cash Contributions

Cash contributions include all forms of payment, such as check, electronic funds transfer, credit card, and payroll deduction. The taxpayer must have at least one of the following records for all cash contributions regardless of the amount:

A bank record showing the name of the qualified organization, the date of the contribution, and the amount of the contribution, such as a canceled check, statement, or credit card statement,

A receipt from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution, or

A payroll deduction record including the paystub, W-2, or other document showing the date and the amount of the contribution, and a pledge card prepared by or for the qualified organization showing the name of the organization.

Cash Contribution of $250 or More

The record keeping requirements for these contributions are more onerous. A gift is considered $250 or more when it is made in a single payment. Gifts given to the same organization over time (example: $25 a week to a church) are not considered gifts of $250 or more. The taxpayer must have at least one of the following records for any cash contribution of $250 or more:

An acknowledgement from the qualified organization for each contribution, or a list of each individual contribution, meeting all of the following requirements:

It is written.

It includes the amount of cash contributed, a statement as to whether any goods or services were received by the taxpayer, and if so, a description and good faith estimate of the value of any goods or services received, and a statement that the only benefit received was an intangible religious benefit if that was the case.

It must be received on or before the earlier date of either the date the tax return is filed for the year the contribution is made, or the due date (including extensions) for filing the return.

It includes the date of the contribution, unless the taxpayer has a bank record (as described above) to serve as a substitute for this particular requirement.

A payroll deduction record including the paystub, W-2 or other document showing the date and the amount of the contribution, and a pledge card prepared by or for the qualified organization showing the name of the organization and a statement that the organization is not providing any goods and services in exchange for the contribution.

Out of Pocket Expenses

The following records must be kept if the taxpayer had unreimbursed out of pocket expenses related to charitable services rendered:

Adequate records to prove the amount of the expenses such as a receipt or bank statement, and

An acknowledgment from the organization meeting all of the following requirements:

It is written.

It includes a description of the services the taxpayer contributed, a statement as to whether any goods or services were received by the taxpayer, and if so, a description and good faith estimate of the value of any goods or services received, and a statement that the only benefit received was an intangible religious benefit if that was the case.

It must be received on or before the earlier date of either the date the tax return is filed for the year the contribution is made, or the due date (including extensions) for filing the return.

Noncash Contributions

Different rules apply for noncash (property) contributions depending on the value of the property. If the taxpayer made donations of similar items throughout the year to the same qualified organization, the total amount of all of the items is considered in determining the value of the property. (Example: If the taxpayer made several donations of books through the year to a local library totaling over $500, the record keeping rules for property over $500 apply.) The amount of a contribution is reduced by the amount of goods and services received in return.

Less than $250

The taxpayer must keep both of the following two items:

A written communication (letter or receipt) from the qualified organization showing the name of the organization, the date and location of the charitable contribution, and a reasonably detailed description of the property.

Exception: A written communication is not necessary when impractical such as an unattended drop off site.

The taxpayer's own written record with all of the information from the qualified organization and the fair market value of the property at the time of the contribution and how that fair market value was calculated (and a copy of the appraisal if applicable), the cost or other basis of the property if the fair market value was reduced by appreciation and how the cost or basis was calculated, any and all records of special elections for capital gain property, the amount of contribution taken for the property for the tax year if less than the taxpayer's entire interest in the property plus any deductions taken in previous tax years for the same property, and the terms of any conditions attached to the property.

Deductions of at Least $250 but Less Than $500

In addition to the records required for contributions less than $250 above, the written acknowledgement from the qualified organization must also meet the following requirements:

It must include a statement as to whether any goods or services were received by the taxpayer, and if so, a description and good faith estimate of the value of any goods or services received, and a statement that the only benefit received was an intangible religious benefit if that was the case.

It must be received on or before the earlier date of either the date the tax return is filed for the year the contribution is made, or the due date (including extensions) for filing the return.

Deductions Over $500 and Over $5000

The taxpayer must report these contributions on Form 8283 rather than Schedule A. Special rules apply depending on the type of property contributed. See IRS Pub. 526, Charitable Contributions for more details if the taxpayer has contributions in this range.