Good afternoon everyone, today we’re going to talk about donating to charitable organizations. I know what you’re thinking, “How is this going to help me financially?” So there is a benefit to donating to a charitable organization. There are a few ways that this may help you:
How much can I deduct?
- Your total charitable deduction cannot exceed 50% of your adjusted gross income (AGI)
- You can deduct the actual cost of gas and oil or $0.14/mile if you drove to do volunteer work, and you can even add parking and tolls to this amount. (This deduction has a limit of $249, unless you get a statement proving that you made a contribution of $250 or more.)
- If donating capital assets, such as property or securities, you have the benefit of not paying for the capital gains tax on those and taking the whole donation amount as a deduction. This is as long as you don’t exceed your AGI.
- There are some charitable contributions that limits your deduction to 30% of your AGI, rather than 50%. (veterans’ organizations, non-profit cemeteries, fraternal societies, and certain private foundations.)
*Note: If you donate an amount, and the organization provides a benefit in return (i.e. Food, Entertainment, Merchandise, Etc.), then you can only deduct the difference between the donated amount and the cost of the benefit.
What Organizations Qualify for this to apply?
- Churches, synagogues, mosques, temples, etc.
- Boy Scouts, Girl Scouts, Salvation Army, Red Cross, Goodwill, etc.
- Non-profit hospitals, or any organizations, trying to find a cure/help people with arthritis, cancer, cerebral palsy, heart disease, diabetes, etc.
- Most non-profit educational organizations, like colleges, as long as your contributions are taking place of tuition or enrollment fees.
- Veterans’ groups
- Federal, state, and local governments, as long as the contributions are for public purposes only.
- Political contributions do not qualify for a deduction.
Focus points: Donating to charity is a benefit towards both you and the charitable organization. This being said, it is important that you keep a record of these donations. If your gifts’ value is $250 or more, you will also need to have a statement from the organization with proof of the donation and whether or not this organization provided any goods or services in return for your donation (if they did, they need to give a description of this good/service along with an estimate on its value). Lastly, keep in mind that there is a limit on your deductions of 50% your AGI.
If you are a business owner looking to increase their contributions, consider donating to a charitable organization. “Generosity can not only have moral benefits but also have financial benefits” This could be very beneficial. Here at Delerme CPA, we strive to help our clients see benefits like this one and help them get the most out of their hard work. Give us a call if you guys are having any concerns or if you have any questions. Have a nice day.