There are many ways to support a charity besides traditional donations via cash or check, yet many taxpayers get confused about how to go about determining what is deductible, when it’s deductible, and how to track it. Sandy Furuya, Senior Accounting Manager with Wamhoff Financial Planning & Accounting Services, reviews rules of thumb for these non-traditional types of donations.
1. Cars, Trucks, Motor Vehicles, Boats, Airplanes:
- Many organizations such as the Red Cross, Make a Wish, Habitat for Humanity, and many others, will accept these types of donations. They will then sell it and use the proceeds to benefit the charity.
- What is deductible: Rather than the fair market value of the donation, you are generally limited to the gross proceeds from its sale if the value of the item is more than $500.
- What you will need: Obtain a 1098-C, or similar statement, from the organization and attach it to your tax return.
- Many people contribute their time to worthy causes, but don’t realize that some expenses related to their volunteerism can be tax deductible.
- What is deductible: Mileage and direct out-of-pocket expenses associated with the volunteer work can be deductible.
- What you will need: Keep a journal of all of your mileage, as well as receipts and descriptions for any items purchased that were directly used for your volunteer work..
3. Paycheck Withholdings:
- While this type of charitable giving isn’t necessarily “non-traditional,” it does tend to create some question as to what is required at tax time.
- What is deductible: Your paycheck withholding amount for the charity for the tax year you are filing.
- What you will need: Keep your year-end paystub, Form W-2, or other documentation furnished by your employer. Also, keep a copy of the pledge card showing the name of the organization and the amount you pledged.
4. Donations made by Credit Card:
- Many organizations have made it easy and convenient to give online and submit payment via credit card, or support their auctions and galas via credit card.
- What is deductible: Contributions are deductible in the year made, so any contributions you made via credit card by December 31, 2013 are deductible for 2013 – even if you haven’t paid the bill yet.
- What you will need: Keep a record of your credit card statement showing who and when the payment went to, along with the documentation from the charitable organization showing your contribution.