Saturday, February 22 2014
Charitable Contributions From Which You Benefit. If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive.
If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. For excess amount to qualify, taxpayer must pay it with the intent to make a charitable contribution.
Example 1. You pay $75 to a ticket to a dinner-dance at a church. Your entire $75 payment goes to the church. The ticket to the dinner-dance has a fair market value of $25. When you buy your ticket, you know that its value is less than your payment. To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from the total payment ($75). You can deduct $50 as a contribution to the church.
Example 2. At a fundraising auction conducted by a charity, you pay $500 for a week's stay at a beach house. The amount you pay is no more than the fair rental value. You have not made a deductible charitable contribution.
For Athletic Events. If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the university or college, you can deduct 80% of the payment you made as a charitable contribution.
If any part of your payment is for tickets rather than the right to buy tickets, that part is not deductible. Subtract the price of the tickets from your payment. You can deduct 80% of the remaining amount as your charitable contribution for the same tax year.
For Charity Benefit Events. If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive.
If there is an established charge for the event, that charge is the value of your benefit. If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit which you can claim as a charitable contribution. Whether you use the tickets or other privileges has no effect on the amount you can deduct. However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount on which you paid for the ticket.
Tuesday, February 18 2014
Types of qualified organizations for your charitable contribution. Generally, only the following types of organizations can be qualified organizations.
Examples of Organizations. The following list gives some examples of qualified organizations; i) Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations, ii) Most nonprofit charitable organizations such as the American Red Cross and the United Way, iii) Most nonprofit educational organizations including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. However, if you contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, iv) Nonprofit hospitals and medical research organizations, v) Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs, vi) Nonprofit volunteer fire companies, vii) Nonprofit organizations that develop and maintain public parks and recreation facilities, and viii) Civil defense organizations.
There are certain foreign charitable organizations. under income tax treaties with Canada, Israel, and Mexico, you may be able to deduct contributions to certain Canadian, Israeli, or Mexican charitable organizations. Generally, you must have income from sources in that country. For more information, see Publication 526.
Monday, February 17 2014
Cash Contributions for 2013. Cash contributions include those paid in cash, check, electronic funds transfer, debit card, credit card, or payroll deduction. You cannot deduct cash contributions, regardless of the amount, unless you keep one of the following:
Sunday, February 16 2014
Charitable Contribution Deduction. When to deduct your donation for 2013? You can deduct your contributions only in the year you actually make them in cash or other property or in a later carry-over year. This applies whether you use the cash or an accrual method of accounting.
Time of making your contribution. Usually, you make a contribution at the time of its unconditional delivery.
Note: Limits on deduction applies. The amount that you can deduct for charitable contributions cannot be more than 50% of your adjusted gross income (AGI) and that your deduction may be further limited to 30% or 20% of your AGI, depending on the type of property you give and the type of organization you give it to. If your total contributions for the year are 20% or less of your AGI, these limits do not apply to you. Proof of contribution is very important, so make sure your keep your records in a safe place.
Saturday, February 15 2014
Medical ad Dental Expenses for 2013. You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7.5% if either you or your spouse is age 65 or older).
What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. if you use a "pay-by-phone" or "online" account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. If you use credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged.
Separate returns. If you and your spouse live in a community property state and file separate returns, each of you can include only the medical expenses each actually paid. Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise.
Community property states. If you and your spouse live in a community property state and file separate returns in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Each of you should include half the expenses. If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. If you live in a community property state, and are not filing a joint return. For more information, visit our page under Community Property or see Publication 555 of the IRS...