Tax Deductions Related to Charity Auctions

It is common practice for charities to hold auction events where attendees will bid upon and purchase items. The questions often arise whether (1) the money spent on the items purchased constitutes a charitable donation and (2) what kind of charitable deduction the individual who contributed the item is entitled to. 

The answer to the first question is some, but not all, of what’s paid for the item may be deductible. So, if you purchase items at a charity auction, you may claim a charitable contribution deduction for the excess of the purchase price paid for the item over its fair market value.  Fair market value being the amount the item would sell for on the open market when the parties to the sale are aware of all the facts, are acting in their own interest, are free of any pressure to buy or sell, and have ample time to make the decision.

You must be able to show, however, that you knew that the value of the item was less than the amount you paid for it. For...

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Charitable Contributions Deduction Liberalized for 2021

charity covid-19 taxes Feb 16, 2021

Article Highlights:

  • Charitable Contributions for Non-Itemizers
  • Penalties for Contribution Overstatement
  • Cash Contributions for Itemizers
  • Substantiation Requirements

As a means to stimulate charitable contributions during the COVID crisis, Congress made two notable changes for 2020—one allowing taxpayers that don’t itemize their deductions an above-the-line deduction for cash contributions of up to $300 and another for those itemizing their deductions to increase the maximum deduction for cash contributions to 100% of their adjusted gross income (AGI).   

The recent COVID-related tax relief act, passed late in December, extends and enhances those liberalized charitable contribution deduction provisions. Here is a rundown on these charitable contribution tax benefits for 2021:

  • Charitable Contributions for Non-Itemizers – The Taxpayer Certainty and Disaster Tax Relief Act allows those who don’t itemize their deductions a deduction of up to $300...
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Year-End Gift Giving with Tax Benefits

charity gifts taxes Dec 09, 2020

Article Highlights:

  • Watch Out for Holiday Gift Scams
  • Gifts with Tax Benefits
  • Gift of College Tuition
  • Qualified Tuition Programs
  • Qualified Charitable Distribution
  • Donor-Advised Funds
  • Work Equipment
  • Employee Gifts
  • Monetary Gifts to Individuals
  • Documentation
  • Timing
  • Special Rules for 2020 Contributions

The holiday season is customarily a time of giving gifts, whether to your favorite charity, family members or others. Some gifts even provide a variety of tax benefits.  

But be wary; during the holiday season, you may receive phone calls, emails, snail mail, or appeals on social networking sites for donations for various causes. However, some of these appeals may come from fraudsters and not legitimate charities. Unfortunately, this happens every holiday season.

So, before writing a check or giving your credit card number to a charity that you aren’t familiar with, check them out so you can be assured that your donation will end up in the right hands. Follow these tips to...

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Tax Law Changes Allow Year-End Charitable Planning Opportunities

charity covid-19 taxes Nov 02, 2020

As the end of the tax year approaches, it is worth spending a few minutes reviewing some of the changes that have been made in the tax laws surrounding donations to charities. In some cases, this guide will serve as a refresher regarding revisions made over the last few years, while in other cases there have been COVID-related changes that you may not be aware of.

Changes from The CARES Act

The most recent change – and one you might have missed – was incorporated within 2020’s CARES Act, which Congress passed to provide relief to those impacted by the global pandemic. In addition to providing paycheck protection for workers and support for small businesses as they struggled to survive the economic impact of coronavirus, the CARES Act also boosted the limit on cash donations from 60% to 100% in some situations. This increase is only valid for tax year 2020 and is limited to cash contributions given to charities that are not donor-advised funds or supporting...

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