Year-end Planning–Charitable Contributions

As the year-end approaches, many are considering making donations to their favorite organizations. In order for those contributions to be tax-deductible, certain criteria must be met. I’ve listed some information below to assist you as you consider making charitable donations.

Tax Deductible Contributions:

  • Qualified organizations including churches, mosques, temples, synagogues and other religious organizations.
  • Boy/Girl Scouts, Red Cross, Salvation Army, United Way, other 501 c 3 organizations
  • Nonprofit schools and hospitals
  • Charitable travel. Many people overlook this deduction, but travel expenses including transportation, meals and lodging are deductible if there is not a significant element of personal pleasure, recreation or vacation in the travel. Car-related expenses are deductible using actual cost or the standard charitable mileage rate of 14 cents per mile.

Following are a few examples of some donations that are not deductible:

  • Money paid to individuals
  • Political groups or candidates for public office (Arkansas offers a $50 political contribution tax credit)
  • Homeowners’ associations
  • Sports clubs/groups, civic leagues, chambers of commerce

For more information, see Publication 526, Charitable Contributions. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deductions, review Exempt Organizations Select Check on the website.

Don’t overlook the fact that cash donations must be substantiated with either bank records (e.g. canceled check or bank statement), or written acknowledgement from the charity documenting the contribution’s amount and date. If a single contribution is $250 or more, the organization must provide written acknowledgement stating whether the charitable organization provided any goods or services in exchange for the contribution. If goods or services were provided, the FMV should be noted. The acknowledgement must be received by the date the tax return is filed (or the extension date of the tax return).

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