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Make sure you have a receipt…or else!

October 6, 2010

During a time of difficult financial woes, we tend to give more even if we have little to give ourselves. In the tax world giving is called “Charitable Contributions.”

 Deductible charitable contributions are given to qualified organizations and can be any of the following:

1)    Cash, check or money order

2)    Property other than cash

3)    Out of pocket expenses as a volunteer

4)    Automobile expenses (@ 14cents a mile)

5)    Expenses for a student living with a taxpayer (call me (212-979-6830) on this one as it is a tough one with regulations)

6)    Travel expenses for a volunteer for meals & lodging (note, No significant level of personal pleasure, recreation or vacation is allowed)

Non Deductible charitable contributions are some of the following:

1)    Money or property, dues or fees to non qualified organizations

2)    Political contributions (most people do not know that!)

3)    FMV of time or services provided (an example of this would be a carpenter building a house for habitat for humanity)

4)    Gifts to individuals

5)    Lobbying donations, law changes or for the taxpayer’s trade or business

6)    Tuition

7)    Cost of  raffle tickets, bingo or the lottery

8)    Value of blood given to a blood bank

9)    Adoption expenses

Qualified organizations need to be approved by the IRS and you can verify them by calling the IRS at 1-877-825-5500 (they have a number just for this) to make sure they are legit and the deduction is a write off.

Examples of Qualified Organizations are:

1)    Churches, mosques, temples, synagogues

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

3)    Fraternal Orders (gifts must be used for charitable purchases)

4)    Veterans and certain cultural groups

5)    Nonprofit schools, colleges, museums, hospitals, and organizations trying to find medical cures

6)    Federal, state & local governments (If gifts are used for public purposes such as Volunteer fire departments, Public parks facilities and Civil defense organizations)

Examples of Non-Qualified organizations are:

1)    Country clubs, lodges, fraternal orders and similar groups (unless they are a qualified charity)

2)    Civic leagues, social and sports clubs

3)    Labor unions and chamber of commerce

4)    Political organizations and candidates

5)    Homeowners associations

Taxpayers are no longer to say they put $20.00 a week in the collection plate at church and expect to have that a charitable contribution UNLESS they have a receipt for it. The IRS has made a point of looking closely at the Sch A and discounting any charitable contributions that have no receipt. So much continues to change in the tax laws that it is always best to consult with your tax preparer regarding these changes.

The end of the year is always a great time to come in and have a free evaluation of your current tax scenario and ask us any questions you may have about what you have done financially all year long. Stop by or visit our website at for directions. See you soon!


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