Charitable Contributions

The average charitable contributions claimed by taxpayers on Schedule A range from $2,058 to $19,651 based on the IRS data from the 2010 tax year. Average contributions increase as the taxpayer’s adjusted gross income increases. Charitable contributions can be a significant deduction for taxpayers who itemize deductions, but what can be deducted?

Deductible contributions include:

  • Money or property given to religious organizations, government units (i.e., US federal, state and local governments), nonprofit groups (e.g., schools, hospitals and volunteer fire departments), public parks, public charities (e.g., Salvation Army, Red Cross, etc.) and veteran organizations;
  • Charitable travel (either using actual costs or a standard mileage rate of $0.14 per mile);
  • Out-of-pocket expenses of volunteers when serving a qualified organization (e.g., scout leaders can deduct the cost of scout uniforms);
  • Unreimbursed expenses of church convention delegates;
  • Housing allowance of $50 per school month for housing exchange students; and
  • Expenses provided for qualified foster care individuals that exceed payments received (as long as there is no profit or profit motive by the foster care provider).

Nondeductible contributions include:

  • Money or property given to civic organizations, foreign organizations (except Canadian, Mexican or Israeli charities), lobby groups, homeowners associations, individuals, and political groups or candidates;
  • Cost of raffle, bingo or lottery tickets;
  • Dues, fees or bills paid to country clubs, lodges or fraternal orders;
  • Tuition payments to secular or religious groups;
  • Value of taxpayer’s time; and
  • Rental value of a timeshare donated to a charity.

Keep in mind that no deduction is allowed for any contribution unless the taxpayer has either (1) bank records (e.g., cancelled check or account statement) or (2) written acknowledgment from the charity documenting the contribution’s amount and date. This means that cash contributions are not deductible unless the taxpayer receives the written acknowledgment. Since charitable organizations are only required to provide written acknowledgements for one-time donations of $250 or more, it is important that taxpayers request receipts for all cash donations.

Contact Flexible Accounting Services of the Triangle today and let us help you sort out the complexity of the charitable contribution rules.