Making the most of your charitable donations
Charitable gifts let you do well for yourself while you do well for others. There are several ways to write off charitable gifts depending on what you give and any “strings” you keep attached. You can deduct up to 50% of your adjusted gross income for cash gifts to “501(c)(3) organizations” or public charities. These include churches, symphonies and museums, schools and colleges, and traditional charities like the United Way. If you give more than 50% of your adjusted gross income in a single year, you can carry forward the excess for 15 years.
Beginning in 2007, you will need some paperwork to audit-proof your deduction. If your gift of $75 or more entitles you to dinner or a banquet, the organization has to disclose the value of those benefits. (You don’t need to reduce your deduction for token items such as calendars and tote bags or “intangible religious benefits.”) If you give more than $250, you’ll need a written receipt from the organization dated no later than the filing date of your return. If your donation to a college entitles you to buy athletic tickets, you can deduct 80% of your gift. The right to buy tickets is valued at 20% of the gift, regardless of the amount. Remember, the cost of the actual tickets is not tax deductible.
Gifts of clothing, furniture, electronics, and household items are deductible at fair-market value, such as the price they would bring at a resale shop. These deductions can be far more valuable than you realize. We publish a worksheet on our website to help you tally the fair market value of your donations. You might be surprised how much you save!
Donna Bordeaux is a Certified Public Accountant and Personal Financial Specialist with Bordeaux & Bordeaux, CPAs, PA in Lake Wylie, SC (a suburb of Charlotte, NC). For further information about Donna or her firm, please visit www.charlottecpafirm.com.