As Benjamin Franklin knew, nothing in life is certain but death and taxes. We all have to pay them, but there are legal methods for minimizing your payout to the government.

Learn to recoup tax losses and put that money back in your pocket - where it belongs. Money and property donations to charity are tax deductible expenses. These donations can reduce your taxable income and lower your tax bill. However, there are specific guidelines that need to be adhered to:

Rules for Claiming the Charitable Contribution Deduction

Your gift of cash or property must meet certain criteria in order to be tax-deductible.

• Claim your tax deduction on Form 1040, Schedule A. For 2008, this is found on Lines 16through 19 on Schedule A.
• You must actually donate cash or property. A pledge or promise to donate is not deductible until you actually pay.
• You must contribute to a qualified tax-exempt organization. Charities will let you know if they have received their 501(c) (3) tax-exempt status. Some organizations are not required to obtain 501(c) (3) status from the IRS, including: churches and other religious organizations.
• You must itemize.
• You must meet record keeping requirements. This includes saving canceled checks, acknowledgment letters from the charity, and appraisals for donated property.

Rules for Monetary Contributions

• You must keep written records of all cash donations: on a ledger, in a day planner, etc.
• You must have supporting documentation for donations of $250 or more.
• Your records must indicate the name of the charitable organization, the date of your contribution, and the amount your contribution.
• This new record keeping requirement took effect beginning with the 2007 tax year.

Rules for Property Contributions

• You must make an assessment of the fair market value of the property you contribute.
• You must attach IRS Form 8283 if your total non-cash contribution exceeds $500.
• If you contribute a car, truck, boat, airplane, or other vehicle, and the vehicle is worth more than $500, you must received a written acknowledgement from the non-profit before you can claim a tax deduction.
• If you contribute property worth more than $5,000, you must obtain a written appraisal of the property’s fair market value.

Limits on Charitable Deductions

There are limits specific to charitable contributions, and there are general limits on itemized deductions. The following are general guidelines:

• Deduct cash contributions in full up to 50% of your adjusted gross income.
• Deduct property contributions in full up to 30% of your adjusted gross income.
• Deduct contributions of appreciated capital gains assets in full up to 20% of your adjusted gross income.
• Charitable contributions in excess of these limits can be carried over to the following tax year. Then, the excess contributions can be carried over for a maximum of five years.

Contributions that are NOT Tax Deductible

• Political parties, political campaigns, or political action committees.
• Contributions given to individual people.
• Fees or dues paid to professional associations.
• Contributions to labor unions, chambers of commerce, or business associations.
• Contributions to for-profit schools and hospitals.
• Contributions to foreign governments.
• Fines or penalties paid to local or state governments.
• The value of your time for services rendered to a non-profit.

The above guidelines are general advice. To examine your tax needs, and see which other tax deductions can be applied to your tax liability, please meet directly with a professional tax planner.

Learn More About Charitable Tax Deductions

Mr. Al Golden specializes in providing income and estate taxation, comprehensive business valuation, complete CFO and controller services, litigation support, expert witness, and forensic accounting. Mr. Al Golden is a Certified Public Accountant (CPA), Certified Valuation Analyst (CVA), a Diplomat of the American Board of Forensic Accounting (DABFA), Certified in Financial Forensics (CFF), and is a member of the American Institute of Certified Public Accountants, the National Association of Certified Valuation Analysts, and the American College of Forensic Examiners.

A.M. Golden Accountancy Corporation offers a free initial consultation - To speak with Mr. Golden immediately, please call his direct line by dialing (760) 444-1913.  If you’d prefer, you may also send an email: al@amgolden.com