Some Year End Charitable Giving Reminders

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  • ALERT: The ability to make direct charitable contributions from IRAs is due to expire at the end of the year. Under present law, an IRA owner, age 70 or over, may directly transfer tax-free up to $100,000 per year to an eligible charitable organization (see below) without being subject to the 20, 30 and 50 percent charitable contribution limitation and without penalty.  Such contributions are not included in the donor’s adjusted gross income and are not to be claimed as deductions.  Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible for direct contribution.  To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity.  Among “ineligible” charities are donor-advised funds and supporting organizations. Donated amounts are counted in determining whether the owner has met the IRA’s required minimum distribution rules.
  • CLOTHING AND HOUSEHOLD ITEMS: A deduction is permitted for clothing and household items donated to charity in good used condition or better.  If a taxpayer claims a deduction of over $500 the donor does not have to meet the “good used condition or better” standard if the taxpayer includes a qualified appraisal of the item with their return. Donors must have a written acknowledgment from the charity for all donations valued at $250 or more that includes, among other things, a description of the items contributed.
  • CASH. Regardless of the amount of a cash donation, and regardless of the method used (check, etc.) in making it, a taxpayer must have documentation containing the name of the charity and the date and amount of the contribution.  Bank records may be used as documentation including canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.  In addition, the foregoing does not modify the requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements of the law regarding documentation and acknowledgment.
  • TIMING:  Contributions are deductible in the year made. Credit card contributions made by a charge in 2013 are deductible in the current year as well as checks written and mailed by the end of the year.
  • QUALIFIED ORGANIZATIONS:  Donations which are tax deductible (and only “itemizers” may take a deduction) are to be made to only “qualified organizations”.  Many such organizations may be identified at Exempt Organization Select Check, available at www.irs.gov.  In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.  Many organizations will provide donors with a “Determination Letter” of their tax-exempt status as “qualified organizations, upon request.
  • CARS, BOATS, AIRPLANES:  The deduction for a car, boat or airplane donated to charity is usually limited to the gross proceeds from its sale if the claimed value is more than $500.

Topics:  Charitable Donations, IRA, Year-End Tax Planning

Published In: Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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