Frequently Asked Questions about Charitable Deductions

In addition to the personal satisfaction of giving charity gifts, charitable deductions are an important part of any company’s tax strategy. Charity gifts total billions of dollars each year and support thousands of necessary programs at home and around the world that simply cannot be supported by governments. 

Governments recognize the critical importance of non-profit organizations, which is why charitable deductions are offered as a tax incentive. Here are a few answers to frequently asked questions about charity gifts and charitable deductions. 

Documentations for charitable deductions
To claim charitable deductions at tax time, you’ll need to keep accurate records. For charity gifts less than $250, a copy of a cancelled check is all the documentation you’ll need. For gifts of $250 or more, you’ll need a “contemptuous written acknowledgement” from the organization. This document in hardcopy or email will suffice for documentation. 

Are there any charity gifts that can’t be deducted?
If you realized a profit as a result of giving charity gifts, then the donation does not qualify as a charitable deduction. Any donation offered with no expectation of return profit can be deducted.

Is there a limit to the amount I can count toward charitable deductions?
You can write off up to 50% of your gross income as a charitable deduction for cash donations. Donations of items can be limited to a 20-30% cap. To qualify for the deduction, charity gifts must be in the form of cash or be considered a “substantial” item. In 2005, items worth more than $8.30 were considered substantial enough to write off.

The above information is not meant to be tax advice. Please consult your financial or tax advisor.


Sources:
Counsel on Foundations:
http://www.cof.org/FAQDetail.cfm?ItemNumber=700

http://www.irs.gov/pub/irs-pdf/p526.pdf
IRS: See “contributions from which you benefit”

http://www.irs.gov/pub/irs-pdf/p526.pdf 
IRS: See “contributions you can deduct”

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