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Tax Tips for Making Charitable Contributions
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8/27/2010
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Recently the IRS issued its ten summertime tax tips for taxpayers making charitable contributions (although summertime is about over...). It is a good recap of some of the rules regarding charitable gifts as you plan your gifts for the balance of the calendar year, 2010. If you have a question or need some further info regarding gifting strategies for 2010, please contact me by phone or email. Dave Hutchison 760-773-4326 or dhutchison@bettyfordcenter.org. | Ten Tips for Taxpayers Making Charitable Donations | | | | IRS Summertime Tax Tip 2010-21
Did you make a donation to a charity this year? If so, you may be able to take a deduction for it on your 2010 tax return.
Here are the top 10 things the IRS wants every taxpayer to know before deducting charitable donations.
1. Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization and most will be able to tell you. You can also check IRS Publication 78, Cumulative List of Organizations, which lists most qualified organizations. IRS Publication 78 is available at IRS.gov.
2. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Be sure to keep good records of any contribution you make, regardless of the amount. For any contribution made in cash, you must maintain a record of the contribution such as a bank record – including a cancelled check or a bank or credit card statement – a written record from the charity containing the date and amount of the contribution and the name of the organization, or a payroll deduction record.
6. Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, your deduction would be $200.
7. Include credit card charges and payments by check in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. For any contribution of $250 or more, you must have written acknowledgment from the organization to substantiate your donation. This written proof must include the amount of cash and a description and good faith estimate of value of any property you contributed, and whether the organization provided any goods or services in exchange for the gift.
9. To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attached the form to your return.
10. An appraisal generally must be obtained if you claim a deduction for a contribution of noncash property worth more than $5,000. In that case, you must also fill out Section B of Form 8283 and attach the form to your return.
For more information see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at IRS.gov. Dave (posted 8-27-2010) | |
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Legislative Update (posted 8-12-2010)
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8/12/2010
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Democratic leaders in both the Senate and House have said they plan to consider legislation dealing with the expiring 2001 and 2003 tax cuts when they return from recess in September, although the exact timing is still unknown. Many lawmakers have also indicated that this broad legislation will include various "extenders" provisions like the IRA Charitable Rollover as well as an estate tax fix. source: Partnership for Philanthropic Planning. Dave - posted 8-12-10
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October 1st is PLAN YOUR GIVING DAY!!
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8/10/2010
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PLAN YOUR GIVING DAY The California Legislature has declared October 1st as Plan Your Giving Day with a purpose to get people to focus on charitable giving in their estate plans. This is a perfect time to review your own (and your significant other) estate planning documents and consider a bequest to Betty Ford Center as part of your charitable giving objectives. At Betty Ford Center, we have an increasing number of friends and families who have made the Center part of their estate plan by making a bequest under their Will or Trust, and who have benefited through the use of life income gifts, gift annuities, charitable trusts, and other types of planned giving arrangements. The simplest form of a planned gift is a gift that costs nothing during your life. By naming Betty Ford Center as the recipient of a bequest under your Will or Living Trust, you can ensure our future and help others also share a life changing experience at the Center. Your estate planning gift will serve as an inspiration to others. I invite you to become a “Sponsor of Hope” by making Betty Ford Center part of your estate plans. Contact me for further information or for sample language that you can send to your lawyer to provide a bequest to Betty Ford Center. Dave (posted August 10, 2010)
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Legislative Update
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6/30/2010
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Legislative Update (posted 6-30-2010): Estate Tax This week Senator Sanders (I-VT), introduced Senate Bill 111-3533. This Bill would reinstate the federal estate tax with graduated rates up to 55%, and in addition would add a 10% surtax on taxable estates larger than $500,000,000. The Bill also repeals the “carryover basis” rules. The effective date is for estates of decedents dying, and gifts made, after December 31, 2009. Note: Congress seems to have trouble getting any changes made to the existing law that has repealed the estate tax for deaths in 2010. It will be interesting to see how fast Congress will move on this legislation. The Sanders Bill reinstates the estate tax retroactively to the first of the year. I am sure there will be lawsuits filed by estates of decedents dying in 2010 who would have paid zero estate tax under the current law, if the estate tax is applied retroactively. IRA Charitable Rollover: Also, after a series of contentious votes, the Senate was unable to invoke cloture to stop debate on the “Tax Extenders” Bill (H.R. 4213) and bring it to a vote. This legislation included the extension of the IRA Charitable Rollover provisions that had expired at the end of 2009. It now goes back to committee, and the next step remains unclear. Dave
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My BLOG is up & running!
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6/23/2010
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Welcome to my Estate Planning Blog. My objective here is to have a forum where I can answer questions that relate to estate planning in general and charitable giving specifically. I will also post my own comments, give legislative updates, and provide what I hope will be useful information as you ponder and struggle with how to make charitable gifts that fit with your specific financial situation, your charitable objectives, and your overall estate planning objectives. Required and usual disclaimer: You should always confer with your attorney, accountant and other financial representative before making any decisions. The information presented here should not be construed legal, accounting, or other professional advice. There are many ways to structure a gift to the Betty Ford Center. Factors to be considered will be a need to retain an income stream on your gift, desire to have control over assets while you are alive, the type of asset to be contributed if other than cash, and the time frame over which the gift is to be paid, if not an immediate gift. Tax and income benefits will vary depending on the type of gift. Some are relatively easy to accomplish and others a bit more complicated. I look forward to discussing these issues with you. Much more to come! Dave
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