TAX TIP No. 65
Cash in on uncommon charitable tax deductions
For example, if you bought 100 shares of stock several years ago for $5 a share and it was selling for $10 a share when you donated it to a charity, you can claim the full appreciated value of $1,000 as a charitable deduction. Remember, this valuation applies to long-term holdings. If you owned the stock for a year or less, you could deduct only what you originally paid for the asset -- $500 in this case.
A growing number of charitable groups have established programs to accept gifts of appreciated property. Check with your favorite charity to see if it can help you through this donation process.
Ease your tax bill, help your country
If you're feeling particularly
patriotic, you can help reduce the country's public debt along with your tax bill.
The Treasury regularly borrows money by selling
Treasury securities such as T-bills, notes, bonds and savings bonds to the public.
This public debt helps raise cash to keep the U.S. government operating. Any contribution
you make to reduce the national debt burden is deductible as a charitable contribution
on your tax return for the year in which you make it.
make the payment as a separate
check payable to Bureau of
the Public Debt and send it
to: Bureau of the Public Debt,
Department G, P.O. Box 2188,
Parkersburg, WV 26106-2188.
If you prefer, you can save
a stamp and stick the check
in your tax return envelope.
Same donation rules apply
Although some of these charitable
donations are not commonly taken, the usual tax
rules still apply.
To be deductible, contributions
must be made to qualified organizations. Ask the group if it meets IRS guidelines.
Most will be able to tell you. Or you can check IRS
Publication 78 online for the latest list. You also can call the IRS at 800-829-1040,
TTY/TDD connection at 800-829-4059, to find out if an organization meets IRS
You now need documentation, such as a bank or charge card statement or canceled check, for all monetary gifts. If your gift is worth $250 or more, you must get an official receipt from the organization before you can claim the deduction.
Don't get greedy
While Uncle Sam is pretty flexible about letting you write
off your good work, don't go overboard. There are some things the IRS says it
|Good deeds the IRS won't let you write off:
||Contributions to a specific individual, regardless of the person's neediness.
||Contributions to a group created to lobby for law changes.
||The value of your time or services, such as the income you forfeited to work as an unpaid volunteer.
||Your personal expenses. For example, the cost of meals while you're volunteering.
||Appraisal fees to determine the value of donated property.
||Contributions to homeowner associations, social or sport clubs, civic leagues or chambers of commerce.
made any of these little-known
but IRS-approved contributions
last year, be sure to count
them when you file your return.
And if your largesse came
Jan. 1 or later, start
a deductible contributions
file now so you'll have the
information at your fingertips
when you file your taxes next
More details about
tax deductions for charitable contributions are found in IRS
Publication 526, Charitable Contributions, and Publication
561, Determining the Value of Donated Property.
|-- Updated: April 7, 2009