by Luanne Kadlub,
The holidays bring out generosity in many people, making the season a bonanza for charities nationwide. Forrester Research notes that 85 percent of all charitable donations are made at this time of year.
The season of giving, however, is closely followed by tax season. Which begs the question: Do you know how much of your gift is tax-deductible and for that matter, if you can even take the deductions?
Quick answer: Only those who itemize their tax returns can deduct contributions. Contributions are deductible for the year in which they are actually paid or delivered. Pledges are not deductible until the year in which they are paid.
BBB Center for Nonprofit Excellence, a center of the BBB Institute for Marketplace Trust Serving Northern Colorado and Wyoming, offers the following guidance when it comes to taking deductions for charitable giving:
• The value of volunteer time or services to a charitable organization is not deductible. However, out-of-pocket expenses directly related to voluntary service are usually deductible.
• Contributions for which the donor receives a gift or other benefits are deductible only to the extent that the donation exceeds the value of the benefit received.
• Direct contributions to needy individuals are not deductible. To be tax deductible, contributions must be made to qualified organizations.
• Keeping records of contributions is essential for itemizers. Acceptable records include bank records and written communications from the charity. Contributions over $250 require a written acknowledgment from the charity.
• Donated property may generally be deducted at the fair market value of the property at the time of the contribution. However, there are special rules for the donation of cars and other vehicles.
• There are more than 20 categories of tax-exempt status. In general, only organizations classified as 501(c)3 and 501(c)19 are eligible to receive contributions deductible as charitable gifts.
~ Luanne Kadlub, Communications Editor, BBB Serving Northern Colorado and Wyoming. 970-488-2044, Toll Free: 800-564-0370 Ext. 135, wynco.bbb.org Start With Trust®. 8020 S. County Road 5, Ste. 100, Fort Collins, CO 80528.