Charitable Contribution Changes

Charitable Contributions by individuals are generally deductible up to 50% of a taxpayer’s contribution base, which is generally a taxpayers AGI. Contributions must be given to charitable organizations such as churches, hospitals, universities, foundations, etc. However with this being said certain contributions of capital gain property is limited to 30% of a taxpayer’s contribution base.

In recent years it has become popular to donate cars to charitable organizations. Often what is done is a car is donated and then sold to generate revenue for the charity. Because of apparent abuses of this the laws have changed. Quite often an individual would donate a car in poor condition and then deduct from their taxes the fair market value of the car has if it had been in good or excellent condition. Because of this the IRS has stated that in order to deduct autos a person must obtain a receipt from the charity disclosing the VIN of the auto and the SS# of the taxpayer and the amount the car was sold for. In addition the receipt must disclose that the sales price not the FMV is the deductible contribution amount.

Another change that has taken effect is that you can no longer take a deduction for clothing and household items that are not in at last “good” condition. Also in connection with this you can no longer deduct any cash deductions without a receipt. What this means in practice is you can no longer deduct what you put in the plate at church or money donated to the guys at the doors during Christmas without a receipt.

The information contained on this site should in no way be considered to be professional advice in the form of either tax, accounting, or legal service or consultation. You should always consult with a professional familiar with your individual circumstances before making any specific decisions related to accounting, tax, or legal matters.