Spreading Cheer This Year?

merry-christmas-2

This season brings with it lots of good cheer to spread around, and along with this cheer comes lots of cheerful giving. There are several tax implications to keep in mind as you give to various charities during this Christmas season.

First, what organizations qualify for you to take a tax deduction for your gift? Qualified charitable organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. Non-qualified organizations include such places as country clubs, civic leagues, chambers of commerce, political organizations, and homeowner organizations, among others.

If you receive a benefit in exchange for a charitable contribution, the deduction is reduced by the value of the benefit received. Additionally, be sure that the organization gives you a receipt showing the value of what you received.

Out-of-pocket expenses you incur in connection with performing volunteer work for a charitable organization (including the charitable mileage deduction) are considered cash contributions. However, the value of your volunteer time is not deductible. If you use your vehicle in connection with volunteering, you may deduct the actual cost of gas and oil or the standard mileage rate. You may also add parking and tolls to the amount you claim for either the standard mileage rate or actual expenses. The standard mileage rate for charity is 14 cents per mile in 2016. Please be aware, however, that a mileage log is required.

If you donate items, such as furniture or clothing, they must be in good condition or better. It is also up to you to determine the fair market value of the item at the time of donation. To help with your valuation, refer to the valuation guide in the resources section of this site. If you donate a vehicle, the amount you can deduct is limited to the greater of the fair market value of the vehicle or what the organization sold it for. One exception is if the charity’s purpose is to provide transportation for the poor, in which case fair market value is used for the deductible amount.

There may be other opportunities or limitations that apply to your specific situation, so please contact us with any questions you may have regarding your donations.

A Very Merry Christmas and a Happy New Year from all of us here at

Heritage Accounting and Tax Services!

new-years-eve-2