Can I claim all my charitable contributions of cash or property as a deduction?

    Published: 06-16-2009
    Views: 12,721
    Goodman & Company Tax Director Art Auerbach discusses which charitable contributions are eligible for deductions.

    Host: Can I claim all my charitable contributions of cash or property as a deduction?

    Art Auerbach: First the charity that you are giving the money to has to be approved by the Internal Revenue Service. If you are contributing money to an Organization and you are not really sure about it the IRS puts out a publication#78 and that's a publication that lists all of the charitable organizations that are eligible to receive contributions. Contributions are then broken down into two parts. Those that you contributed cash or wrote a check for or did on a Credit card which is a cash contribution, for those contributions beginning this year or beginning for the year 2007, you need a bank record to support the charitable contribution. So a canceled check, a charge on a Credit card statement. If you are part of -- if you are a federal employee and they used the combined campaign and they withheld it from your pay. You can show your pay stub to show that money was withheld and all of that represents substantiation for your cash contributions. There is no allowance, if all you did was give cash to a charitable organization. An example, here where people can get trapped. Somebody who is a member of your congregation, a church or a Synagogue had a fire, an accident and the call goes out from the poppet of the organization, so and so a member of the congregation has need and you go out and you buy two bags of groceries. If you buy the groceries and you bring it over to the person's house. They are not listed in publication 78. You really don't have a charitable contribution even though it was asked for by your religious organization. But let's say the religious organization collects all of this food and then bring it to the person in need. That makes it a charitable contribution, because you gave it to an organization listed in publication '78. Contributions of property, as I alluded to in another module that's a difficult thing to do now. You need a list of what you gave away, you need some way of substantiating what its value was when you donated it. It needs to be in good used condition or better before you gave it away and a separate category here is Automobiles.

    There is a new - a form 1098C which is given to people who contribute cars, there are three different kinds of charitable contributions for automobiles. If you give the car to a charity that's going to auction it off, your deduction is going to be what the charity actually received at Auction; it has nothing to do with the fair value of the automobile. If you give the car to a charity that's going to use the car in its charitable purpose then your deduction is the fair market value of the car on the day you gave it away. If you give the car to a charity that's going to fix it up and give the car to a member of the community who is in need then your contribution again is the fair market value of the car on the date you gave it away. Now in determining fair value of a property, please take into account the condition of the property. The good old days where there used be from $0 to $500 was not questioned by anybody that's gone. In the Pension Protection Act in 2006, they basically eliminated that. You need a list if you want to determine a fair value of property contributed, there is a program that's available on the Web called 'its deductible' and if you get on the Web and use the program, it will ask what you gave away. You will get on the box web and check a box as to what is the condition and it will give you what's known as its thrift shop value, that's what the Thrift shops that the charities run will be able to sell it for, that's an indicator of its fair value when you gave it away. That could be a basis of your charitable contribution.