With a chill in the air and holiday décor taking over every big box store, you have to know ‘tis the season for giving”. As a Reno tax advisor, I am often asked about the benefits of donating to a good cause. Sure it feels good yet is there a balance between to little or too much? It depends. The IRS has become much more rigorous about donations so I thought I’d give you a little bit of insight to help you through the ‘season of giving’
1) Timing First of all, if your level of donations is slim to none in year 2012, it’s probably time to get jolly and make sure your donations are documented (i.e. received by the organization) before December 31st – and not posted any day after in order to claim your gifts this year.
2) Qualification Well-organized non-profits usually fall under the umbrella of a ‘qualified’ organization where your donation can indeed be a write-off; all you need to do is ask to see their 501 (c) (3) designation and you’re good to go. Be sure to get a receipt.
3) Too little or too much? You can make as many donations as you’d like yet when it comes down to how much you will actually be able to deduct, the rules tell us you can deduct donations in full up to 50% of your adjusted gross income.
4) Planes, trains and automobiles: Perhaps you’d rather donate your old favorite Mustang that has great memories yet is taking up too much space in the garage? Or a boat that you’ve lost your passion to float? You’re better off selling it on E-bay as car donations (and other toys) are under too many radars with regard to maintenance, accident history, etc.
5) Sweat equity: Don’t lose the spirit to chip in to help those who need it most regardless of what I am going to tell you. Inasmuch as one would think you could deduct your hourly time for your hard given labor, you can’t. You can, however deduct expenses for mileage and out of pocket cash.
We know that preparing your own income tax return can be a task that leaves you with more questions than answers. Whether we like it or not, today’s tax laws are so complicated that filing a relatively simple state tax return or federal tax return in an effort to get your tax refund can be confusing. So leave the stress to us. Contact Mark Robertson for all of your questions during this season of giving, and all year-round.