Tax Benefits of Charitable Giving

The following is a brief summary of certain federal income tax  laws for informational purposes only. Always consult your tax  advisor for the federal, state, and local tax consequences of a  charitable contribution.

Benefits of Charitable Giving

A gift to a qualified charitable organization may entitle you to a  charitable contribution deduction against your income tax when you  itemize deductions. The actual amount of the donation is reduced by your tax savings. A contribution to a qualified charity is deductible in the year in which  it is paid. Putting the check in the mail to the charity constitutes  payment. A contribution made on a credit card is deductible in the year  it is charged to your credit card, even if payment to the credit card company is made in a later year.

Most charitable organizations qualify for a charitable contribution deduction. You can deduct contributions only if they are made to or for the use of a  qualified recipient, such as the YRCC.

There are limits to how much you can deduct, but they are very high.
For most people, the limits on charitable contributions don't apply.  Only if you contribute more than 20% of your adjusted gross income to  charity is it necessary to be concerned about donation limits. If the  contribution is made to a public charity, the deduction is limited to  50% of your contribution base. For example, if you have an adjusted  gross income of $100,000, your deduction limit for that year is $50,000.

Rules exist for non-cash donations.

If you contribute property owned for more than one year, the value of  the deduction is normally equal to the property's fair market value. You  have an advantage when you contribute appreciated property because you  get a deduction for the full fair market value of the property. You are  not taxed on any of the appreciation, so, in effect, you receive a  deduction for an amount that you never reported as income.

You should clearly contribute, rather than throw out, old clothes,  furniture and equipment that you no longer use. However, bear in mind  the condition of your donated goods. The IRS only permits deductions for  donations of clothing and household items that are in "good condition or better."