In Actor Speak
Tax Tips on Charitable Contributions
To be deductible, contributions must be made to qualified exempt organizations. Organizations can tell you if they are qualified and if donations to them are deductible. Sorry, but the homeless person with their hand out on the street is NOT a qualified exempt organization. We aren't saying not to help them out, but just to understand you can't write off the gift.
Only contributions actually made during the tax year are deductible. This includes credit card charges and payments by check which are deducted in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the following year.
You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations.
Value of Time or Services
A common misunderstanding is the donation to charitable organizations of your time or services. Despite what many charities may lead you to believe, You CANNOT deduct the value of your time or services, including:
- Blood donations to the American Red Cross or to blood banks, and
- The value of income lost while you work as an unpaid volunteer for a qualified organization.
Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:
- Directly connected with the services,
- Expenses you had only because of the services you gave, and
- Not personal, living, or family expenses.
If you volunteer for a qualified organization, the following questions and answers may apply to you. All of the rules explained in this publication also apply. See, in particular, Out-of-Pocket Expenses in Giving Services.
I volunteer 6 hours a week in the office
of a qualified organization. The receptionist is paid $10 an hour for
the same work.
Can I deduct $60 a
week for my time?
No, you cannot deduct the value of your time or services.
The office is 30 miles from my home. Can I deduct any of my car expenses
for these trips?
Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. If you do not want to figure your actual costs, you can deduct 14 cents for each mile.
I volunteer as a Red Cross nurse's aide
at a hospital. Can I deduct the cost of
the uniforms I must wear?
Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering.
I pay a babysitter to watch my children
while I volunteer for a qualified organization. Can I deduct these costs?
No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses.)
CASH CONTRIBUTIONS (Including Check, Cash, & Credit Cards)
In tax year 2007 the IRS instituted additional measures on Cash Contributions in any amount. You must be able to prove your contributions with written proof both from your bank or credit card as well as from the charitable organization to back up your claim at an audit.
Keep this in mind at all times when you make your contributions.
CONTRIBUTIONS OF GOODS
When you write off a contribution for donations other than cash or check, such as clothing, furniture and such, in an audit the IRS has the right to ask that you be able to list in detail all the items you contributed, the original purchase date(s), the original cost and the "street value" of each item you are claiming on the goods at the time of donation.
A person donating property valued (i.e. car, piece of artwork, boat) at more than $5,000 must obtain a qualified written appraisal. Generally the organization receiving the donation understands this and will provide the certification.
Those who donate their cars may also claim only the fair market value of the car. The fair market value takes into account many factors, including the vehicle’s condition. The fair market value may differ substantially from the car’s Blue Book value. For vehicle donations, taxpayers must document both the car donation and its fair market value.
Although there are wonderful charities out there asking for your goods, all too many of them provide very simplistic receipts for the items you drop off. As we explained above it is not sufficient to get a receipt for "three bags of clothing" from Goodwill, the Salvation Army or the like because they are often not signed and almost always lacking in the detail required by an IRS examiner. You also need to be able to verify the above information for all of the items in those bags.
For that reason we recommend that you make your donations to the following organization specifically because THEY go through the bags you drop off, itemize each piece and place a value of their determination on the goods and then mail you a signed copy of their receipt for your records. They also maintain a copy in their files in case the IRS ever has a reason to call for verification.
With their written receipt, all of the hard work is done and experience has shown us you will probably get more for the deductions than most people give themselves.
We can't speak too highly of them.
For Contributions of Goods, we recommend:
National Council of Jewish Women or
"Council Thrift Shops".
To make a donation and/or schedule a pick-up, please call
(800) 400-6259 or (323) 655-3111
Council Thrift is now on E-Bay! Ranked "one of the top ten thrift shop operations in the country" by The Rag Street Journal, NCJW/LA’s Council Thrift Stores are a treasure trove of used designer clothing for women and men, accessories, jewelry, appliances, furniture, vintage clothing, and collectibles. Dedicated shoppers include Hollywood costumers, actors, musicians and antique aficionados - many of who are also our regular donors. "It’s an addiction," laughs actor/comedian Andy Dick, who scours the stores regularly for personalized bowling balls.
Founded in 1924 as a result of the Immigrant Aid Program, the first NCJW/LA Council Thrift Store was stocked with useful household items. Now, at the start of a new millennium, NCJW/LA’s Thrift Department encompasses eight stores and receives more than 50,000 donations annually. Revenues generated by the stores, and our semi-annual Fabulous Flea help fund vital community service programs for at-risk women, children and families.
Council Thrift Shop Locations in the Los Angeles Area:
All Council Thrift Shop locations are open seven days a week from 9:30am to 6:00pm.
LOS ANGELES AREA
11801 Santa Monica Boulevard
Los Angeles, CA 90025
455 N. Fairfax Avenue
Los Angeles, CA 90036
1052 S. Fairfax Avenue
Los Angeles, CA 90019
8520 W. Pico Boulevard
Los Angeles, CA 90035
10960 Santa Monica Boulevard
Los Angeles, CA 90025
12120 Venice Boulevard
Los Angeles, CA 90066
SAN FERNANDO VALLEY
12203 Ventura Blvd.
Studio City, CA 91604
14526 Victory Boulevard
Van Nuys, CA 91411
21716 Sherman Way
Canoga Park, CA 91303
In the Words of the IRS:
Types of Qualified Organizations
Generally, only the five following types of organizations can be qualified organizations
1) A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must be organized and operated only for one or more of the following purposes
f) The prevention of cruelty to children or animals
Certain organizations that foster national or international amateur sports competition also qualify
2) War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions
3) Domestic fraternal societies, orders, and associations operating under the lodge system
Note. Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals
4) Certain nonprofit cemetery companies or corpo-rations
Note. Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt
5) The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions
Note. To be deductible, your contribution to this type of organization must be made solely for public purposes
Example 1. You contribute cash to your city's police department to be used as a reward for information about a crime. The city police department is a qualified organization, and your contribution is for a public purpose. You can deduct your contribution
Example 2. You make a voluntary contribution to the social security trust fund, not earmarked for a specific account.
Because the trust fund is part of the U.S. Government, you contributed to a qualified organization. You can deduct your contribution
Examples. The following lists gives some examples of qualified organizations
Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations
Most nonprofit charitable organizations such as the Red Cross and the United Way
Most nonprofit educational organizations, including the Girl (and Boy) Scouts of America, colleges, museums, and daycare centers if substantially all the child care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct
Nonprofit hospitals and medical research organizations
Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs
Contributions You Can Deduct
Generally, you can deduct your contributions of money or property that you make to, or for the use of, a qualified organization. A gift or contribution is "for the use of" a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement
The contributions must be made to a qualified organization and not set aside for use by a specific person
If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. See Contributions of Property, later
Your deduction for charitable contributions is generally limited to 50% of your adjusted gross income, but in some cases 20% and 30% limits may apply.
The total of your charitable contributions deduction and certain other itemized deductions may be limited. See the instructions for Form 1040 for more information
1) You get a small item or other benefit of token value
2) The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full
The organization determines whether the value of an item or benefit is substantial by using Revenue Procedure 90–12 and 92–49 and the revenue procedure with the inflation adjusted amounts for the current year
Written statement. A qualified organization must give you a written statement if you make a payment to it that is more than $75 and is partly a contribution and partly for goods or services. The statement must tell you that you can deduct only the amount of your payment that is more than the value of the goods or services you received. It must also give you a good faith estimate of the value of those goods or services
The organization can give you the statement either when it solicits or when it receives the payment from you
Exception. An organization will not have to give you this statement if one of the following is true
1) The organization is:
The type of organization described in (5) under Types of Qualified Organizations, earlier, or
Formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context
2) You receive only items whose value is not substantial as described under Token items, earlier
3) You receive only membership benefits that can be disregarded, as described earlier.