 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Charitable Reporting on Tax Returns
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
Nearly every adult American can tell you what is significant about the date April
15th. That infamous tax-filing milestone will soon be upon us. For tax year 2005 there are several changes in regards
to charitable reporting. By looking at these changes we can gain some general knowledge regarding charitable giving.
Listed below are several reporting changes worthy of discussion.
Gifts of cars, boats, and aircraft – For a gift valued at over $500 (except for some rare exceptions) the
normal practice will be for the charity to sell the vehicle within 30 days and report the gross proceeds for the
sale on form 1098-C to the donor. The donor will then report the lesser of the vehicle’s market value as of the
date of the contribution or the gross proceeds from the sale as his or her charitable deduction.
Property Gifts – Noncash contributions are subject to different rules depending upon the value of the gift.
Gifts of less than $250 require the donor to retain a receipt from the donee organization. This assumes it is practical
to receive a receipt. A gift left on the doorstep of a charitable organization would not receive a receipt. In
this case the donor is required to keep written records of the donation. Gifts of at least $250 but not more than
$500 require a receipt from the qualified charity. Gifts over $500 but not more than $5000 require the donor to
include in his or her written records the method of acquisition of the property, the date of the acquisition, and
the cost basis of the property. A gift over $5000 of noncash property (except publicly traded stock) requires a
qualified written appraisal. The appraiser is to sign Form 8283 and the donor is to include that form with their
tax filing but does not have to include the actual appraisal. For donations in excess of $500,000 the actual appraisal
must also be attached to the donor’s tax return.
Charitable Gifts over the 50% Adj. Gross Income Limit – Charitable cash gifts to public charities are normally
limited to 50% of the donor’s adj. Gross income. As previously discussed in this column a new rule law was legislated
in the wake of hurricane Katrina that applies to cash contributions made between Aug. 27, ’05 and Jan. 1, ’06.
This special provision allows donors to deduct cash gifts up to 100% of the donor’s AGI. This special deduction
provision does not apply to cash gifts to private foundations, supporting organizations, or donor advised funds.
Hurricane Katrina Mileage Rate – Car expenses for charitable purposes are normally
deductible at a standard mileage rate of 14 cents per mile. Charitable mileage expense incurred between August
24 and September 25, 2005 necessary "to provide relief related to Hurricane Katrina" is deductible at
a rate of 29 cents per mile. After August 31, 2005 and before July 1, 2006 the rate is 34 cents per mile. For 2006
Hurricane Katrina relief mileage is deductible at 32 cents per mile. In addition, charities were permitted to provide
mileage reimbursement to Hurricane Katrina volunteers. The mileage reimbursement received from a charity is not
taxable if no compensation was paid to the volunteer.
My hope is that in reading these rather mundane tax-reporting changes that you will become aware of some of the
many ways that you can support charitable causes. These tax provisions also highlight the fact that our government
encourages us to participate in charitable activity by offering substantial tax incentives. In this regard maybe
the pain of April 15th is slightly lessened.
The Union County Foundation encourages you to work closely with your professional
advisor(s) as you consider your present and future charitable goals. The Foundation is equipped to help you achieve
these goals by providing: planned giving and estate planning resource information, charitable gift annuities/life
income plans, and a broad array of charitable choices. Please call us at 937-642-9618, email us, reference our
website, or stop by our Marysville office at 126 N. Main St. We are committed to helping you.... “preserve
your footprint in time.” |
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