The Antelope Valley Astronomy Club Inc., is a non-profit corporation with federal tax exempt status under the provisions of Section 501(c)(3) of the Internal Revenue Code. As such, contributions made to this club are fully tax deductible.
Basic Facts on Charitable Tax Deductions When Donating to an Organization with 501(c)(3) Exemption Status
The following are basic guidelines. Please consult a tax specialist for specific information.
What is the principal characteristic of a charitable gift? A gift is a voluntary transfer of money or property that is made with no expectation of a commensurate return. If a donor receives a financial or economic benefit in return for making a gift, the payment is not a deductible charitable contribution except to the extent that it exceeds the fair market value of the benefit.
Who may deduct charitable contributions? Currently, only donors who itemize deductions on their federal income tax returns may deduct their gifts to qualifying nonprofit organizations. Legislation, however, such as The Charitable Giving Tax Relief Act would extend the tax deduction for charitable donations to nonitemizers, who represent over two-thirds of American taxpayers.
Which organizations qualify as recipients of deductible charitable contributions? Donors may deduct their gifts to religious, charitable, scientific, educational and literary institutions and others that are incorporated as 501(c)(3) organizations. Gifts to state and local government, the federal government, qualifying veterans and fraternal organizations and certain cemetery companies also may be deductible. (For a complete list, please refer to Code Section 170(c)(2)(B) of the Internal Revenue Code.)
Must a donor keep records in order to take a deduction for a charitable contribution? Yes, and the record keeping requirements vary according to the amount and type of gift. For contributions less than $250, the canceled check, credit card or cash receipt will suffice. For contributions of $250 or more, the donor must obtain a "contemporaneous written acknowledgment" from the charity, which must contain the date and amount of the contribution and a list of benefits (if any) received in return with an estimation of their value.
What statements must the charity provide to the donor? When gifts exceed $75 and the charity provides a return benefit, the charity must give the donor a written statement that provides a good faith estimate of the value of the return benefit, and advises the donor that only the amount of the gift in excess of the benefit is deductible. Charities must provide donors with a written acknowledgment of all gifts of $250 or more whether there is a return benefit. This acknowledgment must state whether or not the charity provided a return benefit and, if a benefit was provided, include the required disclosure.
Can charitable contributions be made with property instead of cash? Yes, but special rules apply for determining the value of donated property, for the records that the donor must keep, for the documents that must be filed with the IRS, and, in some cases, for the amount of the contribution that you can deduct.
Does every benefit, even a T-shirt, reduce the amount of the contribution that can be deducted? No. Some benefits are so insignificant they may be disregarded. If an item is an "insubstantial" benefit, the amount of the contribution that can be deducted is not reduced by the value of the item. Special rules define when a benefit is insignificant.
Can a donor refuse a benefit and so avoid having the benefit treated as having been received in return for a charitable contribution? Yes, but only if the donor explicitly rejects the benefit. It is not enough that the donor simply chooses not to use the benefit.
Can a volunteer deduct the value of his or her services? No. Individual taxpayers may not deduct the value of their donated services.
Can a volunteer deduct his or her expenses? Some expenses incurred when volunteering services, for example, travel expenses, are deductible if they are not reimbursed by the charity. However, travel expenses are deductible only if there is no significant element of personal pleasure, recreation, or vacation associated with the travel.
Please contact your tax specialist for specific information