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2012 Federal Tax Amendment

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2012 Federal Tax Amendment

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Tax Law Changes Related to National Disaster Relief

FS-2009-8, January 2009

(Updated June 21, 2010 — For information regarding the filing of 2009 income tax returns, refer to the last section of this document, "Reporting Losses from a Federally Declared Disaster Occurring in 2010.")

The National Disaster Relief Act of 2008, Subtitle B or Title VII of the Emergency Economic Stabilization Act of 2008, signed into law on Oct. 3, 2008, as Public Law 110-343, provides tax relief for victims of federally declared disasters occurring after
Dec. 31, 2007, and before Jan. 1, 2010.

Prior to enactment of the National Disaster Relief Act, when a major disaster struck, Congress would draft legislation providing targeted tax benefits for taxpayers affected by the disaster that were specific to that particular disaster.

The National Disaster Relief Act, which provides a broad package of tax benefits that may be used by anyone who is affected by a federally declared disaster, effectively replaces the strategy of providing targeted benefits for disaster victims in the weeks or months following the incident. Certain provisions of the National Disaster Relief Act of 2008 do not apply to the Midwestern disaster areas –– disasters affecting the Midwest that were declared from May 20, 2008 through July 31, 2008 –– because the Heartland and Hurricane Ike Disaster Relief Act, part of the same legislation that resulted in the National Disaster Relief Act, provides other tax benefits. See Publication 4492-B for detailed information on the tax benefits that apply to the Midwestern disaster areas. 

The National Disaster Relief Act provides the following tax benefits: 

  • Allows all taxpayers, not just those who itemize, to claim the casualty loss deduction regardless of the taxpayer’s adjusted gross income level;
  • Increases the amount by which all individual taxpayers must reduce their personal casualty losses from each casualty from $100 to $500 for taxable years beginning after Dec. 31, 2008. The reduction amount returns to $100 for taxable years beginning after Dec. 31, 2009;   
  • Removes the requirement that the net casualty loss deduction be allowed only if the casualty loss exceeds 10 percent of the taxpayer’s adjusted gross income;
  • Provides a five-year net operating loss (NOL) carryback for qualified natural disaster losses.
  • Waives certain mortgage revenue bond requirements for affected taxpayers and allows the bond proceeds to be used for rebuilding.

For business taxpayers, the Act also:   

  • Allows an affected business taxpayer to deduct certain qualified disaster cleanup expenses;
  • Allows an affected business taxpayer to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available; and
  • Increases the limits that an affected business taxpayer can expense for qualifying section 179 property.

Major portions of the National Disaster Relief Act are highlighted below.

See Publication 547, Casualties, Disasters, and Thefts, for information necessary in preparing 2008 tax returns. 

Section 706: Losses Attributable to Federally Declared Disasters

Section 706 of the National Disaster Relief Act provides relief to individual taxpayers whose personal-use property was damaged or destroyed by a casualty in a federally declared disaster area. 

Under prior law, individuals who suffered casualty losses as a result of a Presidentially-declared disaster –– the term was redefined as “federally declared disaster” in the legislation –– were required to reduce the loss from each casualty event by $100 and reduce the total of their casualty losses for the tax year by 10 percent of their adjusted gross income. In addition, these individuals were required to claim their casualty losses as an itemized deduction. 

The new law removes the 10 percent of adjusted gross income limitation for net disaster losses and allows individuals to claim the net disaster losses even if they do not itemize their deductions. 

To qualify, a loss must be attributable to a federally declared disaster and occur in an area determined by the President to warrant federal assistance. A federally declared disaster is any disaster subsequently determined by the President to warrant assistance by the federal government under the Stafford Act. The deduction is limited to the “net disaster loss” which consists of the excess of personal casualty losses attributable to a federally declared disaster over personal casualty gains. The new law is effective for disasters declared in taxable years beginning after Dec. 31, 2007, and occurring before Jan. 1, 2010. Information on disaster declarations and the areas they encompass may be found at the Federal Emergency Management Agency (FEMA) Web site.

The new law also changes the amount by which all individual taxpayers must reduce their personal casualty losses from each casualty from $100 to $500. This change is effective for taxable years beginning after Dec. 31, 2008. The reduction amount returns to $100 for taxable years beginning after Dec. 31, 2009.   

For more information on these tax law changes, see Publication 547, Casualties, Disasters, and Thefts.

Section 712 provides that these changes to the law do not apply to the casualty losses in the Midwestern disaster areas declared during the period beginning on May 20, 2008, and ending on July 31, 2008. See Publication 4492-B for more information on the Midwestern disaster areas.

Section 707: Expensing of Qualified Disaster Expenses

Section 707 of the National Disaster Relief Act allows taxpayers to elect to currently deduct qualified disaster expenses in the tax year paid or incurred. Qualified disaster expenses consist of expenditures paid or incurred in connection with a trade or business or with business-related property that otherwise must be capitalized and that are:

  • For the abatement or control of hazardous substances that were released on account of a federally declared disaster;
  • Debris removal or demolition of structures on real property damaged or destroyed by a federally declared disaster; or
  • For the repair of business-related property damaged by a federally declared disaster. 

As previously explained, a federally declared disaster is any disaster subsequently determined by the President to warrant assistance by the federal government under the Stafford Act. This provision is effective for amounts paid or incurred after Dec. 31, 2007, in connection with disasters declared after that date and federally declared disasters occurring before Jan. 1, 2010. 

Section 712 provides that these changes to the law do not apply to the casualty losses in the Midwestern disaster areas declared during the period beginning on May 20, 2008, and ending on July 31, 2008

Section 708: Net Operating Losses Attributable to Federally Declared Disasters

In general, a net operating loss is carried back two years and carried forward 20. Section 708 of the National Disaster Relief Act allows taxpayers to carry back a qualified disaster loss five years. A qualified disaster loss is the lesser of the taxpayer’s net operating loss for the taxable year or the sum of the following:

  • The taxpayer’s losses allowable under section 165 of the Internal Revenue Code for the taxable year attributable to a federally declared disaster occurring before Jan. 1, 2010, and occurring in a disaster area; and
  • The taxpayer’s deduction for the taxable year for qualified disaster expenses allowable under section 198A(a) of the Internal Revenue Code (or the amount that would have been allowable if the taxpayer deducted qualified disaster expenses). 

A qualified disaster loss is treated a net operating loss that is separate from the taxpayer’s regular NOL. 

Section 708 also includes a provision that allows taxpayers to elect to disregard the five-year carryback rule for their qualified disaster loss. . 

Finally, Section 708 provides an exception to the general rule that a taxpayer may use an alternative minimum tax (AMT) net operating loss deduction to offset only 90 percent of the taxpayer’s alternative minimum taxable income. Section 708 provides that the 90-percent limit does not apply to the portion of the AMT net operating loss deduction attributable to a qualified disaster loss. 

These rules apply to disasters declared in taxable years beginning after Dec. 31, 2007.  

Section 712 provides that these changes to the law do not apply to the Midwestern disaster areas declared during the period beginning on May 20, 2008, and ending on July 31, 2008.

Section 709: Waiver of Certain Mortgage Revenue Bond Requirements Following Federally Declared Disasters

Section 709 of the National Disaster Relief Act adds new paragraph 12 to section 143(k) of the Internal Revenue Code, which waives certain mortgage revenue bond requirements otherwise applicable where an affected taxpayer’s principal residence is destroyed or damaged as a result of a federally declared disaster. An earlier law, the Housing Assistance Tax Act of 2008 enacted on June 30, 2008, also added a different §143(k)(12) to the Code. So currently there are two §143(k)(12)s in the Code.

New Code section 143(k)(12)(A) provides that, at the election of the taxpayer, if a person’s principal residence is destroyed –– the home is rendered unsafe for use as a result of a federally declared disaster occurring between Dec. 31, 2007 and Jan. 1, 2010, or the home is demolished or relocated because of an order issued as a result of such federally declared disaster occurring during such timeframe –– then for two years following the date of such disaster, the three-year requirement of section 143(d)(1) does not apply and the purchase price requirement is relaxed. Accordingly, such person may receive a mortgage loan financed with the proceeds of tax exempt qualified mortgage bonds regardless of whether he owned his principal residence within three years of receiving such mortgage loan, and such mortgage loan may be for the acquisition of a home which costs 110 percent of the average area purchase price. 

New Code section 143(k)(12)(B) provides that, at the election of the taxpayer, if a person’s principal residence is damaged as a result of a federally declared disaster occurring after Dec. 31, 2007, and before Jan. 1, 2010, any loan taken by such person to repair or reconstruct such residence in an amount equal to the lesser of the cost of such repair or reconstruction or $150,000 may be treated as a qualified rehabilitation loan and thus may be financed using the proceeds of tax-exempt qualified mortgage bonds. An election, once made, cannot be revoked unless permission is granted by the Secretary. 

Section 709 further provides that a taxpayer who makes a section 143(k)(12) election  may not also elect to apply the special rules for residences located in disaster areas found in Code section 143(k)(11). The special rules found in Code section 143(k)(11) allow taxpayers to use the proceeds of tax exempt qualified mortgage bonds issued between May 1, 2008, and Jan. 1, 2010, to finance mortgage loans for residences located in disaster areas for two years from the date of the applicable disaster declaration without regard to the three-year requirement by treating the residence as if it were a targeted area residence for purposes of the purchase price requirement and the income requirements. This provision, unlike § 143(k)(12), does not limit the financing only to those taxpayers whose homes were damaged by the disaster.

Section 712 provides that these changes to the law do not apply to the Midwestern disaster areas declared during the period beginning on May 20, 2008, and ending on July 31, 2008.

Section 710: Special Depreciation Allowance for Qualified Disaster Property

Section 710 of the National Disaster Relief Act provides a special 50 percent depreciation allowance for purchases of qualified disaster assistance property. It allows taxpayers to deduct 50 percent of the cost of qualified disaster assistance property in addition to the regular depreciation allowance that is normally available.

This new special “bonus depreciation” allowance applies to most types of tangible personal property and computer software acquired on or after the date on which the federally declared disaster occurs, and placed in service on or before Dec. 31 of the third year following the date on which the federally declared disaster occurs. In addition, the new bonus depreciation allowance applies to most nonresidential real property and residential rental property acquired on or after the date on which the federally declared disaster occurs, and placed in service on or before Dec. 31 of the fourth year following the date on which the federally declared disaster occurs.

To qualify for the new bonus depreciation allowance, 80 percent or more of the use of the property must be in the disaster area and in the active conduct of a trade or business by the taxpayer in that disaster area. Also, the property owner must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the federally declared disaster and must be similar in nature to, and located in the same county as, the property being rehabilitated or replaced.

Section 711: Increased Expensing for Qualified Disaster Assistance Property

In general, a taxpayer may elect to expense up to a certain amount or dollar limit of section 179 property placed in service during the tax year. However, this dollar limit is reduced, but not below zero, if the cost of section 179 property placed in service during that year exceeds a certain amount, or reduced dollar limit. For 2008, the dollar limit is $250,000 and the reduced dollar limit is $800,000.

Section 711 of the National Disaster Relief Act increases the limits that businesses can expense for qualified section 179 disaster assistance property. Generally, the new law increases the dollar limit that is normally available for a particular tax year by the lesser of $100,000, or the cost of qualified section 179 disaster assistance property placed in service during that year. Also, the new law generally increases the reduced dollar limit that is normally available for a particular year by the lesser of $600,000, or the cost of qualified section 179 disaster assistance property placed in service during that year.    

Qualified section 179 disaster assistance property is section 179 property that is qualified disaster assistance property for purposes of the new bonus depreciation allowance provided under section 710 of the National Disaster Relief Act. Section 179 property is most types of tangible personal property and off-the-shelf computer software.

The new law did not change the amount that a taxpayer can elect to expense for certain sport utility vehicles and certain other vehicles placed in service during the tax year.  Accordingly, a taxpayer cannot elect to expense more than $25,000 of the cost of these types of vehicles.

Section 712: Coordination with Heartland Disaster Relief

Section 712 of the National Disaster Relief Act explains that certain provisions contained in the National Disaster Relief Act do not apply to the Midwestern Disaster Areas. For information specific to the Midwestern Disaster Areas, see Publication 4492-B.

Reporting Losses from a Federally Declared Disaster Occurring in 2010

The National Disaster Relief Act of 2008, Subtitle B or Title VII of the Emergency Economic Stabilization Act of 2008, provided enhanced tax relief for victims of federally declared disasters occurring after Dec. 31, 2007, and before Jan. 1, 2010. Those provisions are not effective for disasters occurring after Dec. 31, 2009. Legislation extending the provisions to disasters occurring before Jan. 1, 2011, has been proposed but has not yet been signed into law.

Because the enhanced casualty loss provisions are not effective for federally declared disasters occurring after Dec. 31, 2009, taxpayers affected by federally declared disasters in 2010 may take the loss into account for tax year 2009. See Page 12 of the 2009 version of Publication 547 for information on elections to deduct disaster losses in the year preceding the disaster year, including the time limits on making such elections.

This means, if you are an affected taxpayer with respect to a federally declared disaster occurring after Dec. 31, 2009, you may claim the loss on your 2009 income tax return. Claiming a loss on your 2009 return will allow you to take advantage of the National Disaster Relief Act provisions effective for tax year 2009. 

Page Last Reviewed or Updated: 20-Mar-2014

The 2012 Federal Tax Amendment

2012 federal tax amendment 24. 2012 federal tax amendment   Contributions Table of Contents Introduction Useful Items - You may want to see: Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions of PropertyException. 2012 federal tax amendment Household items. 2012 federal tax amendment Deduction more than $500. 2012 federal tax amendment Form 1098-C. 2012 federal tax amendment Filing deadline approaching and still no Form 1098-C. 2012 federal tax amendment Exception 1—vehicle used or improved by organization. 2012 federal tax amendment Exception 2—vehicle given or sold to needy individual. 2012 federal tax amendment Deduction $500 or less. 2012 federal tax amendment Right to use property. 2012 federal tax amendment Tangible personal property. 2012 federal tax amendment Future interest. 2012 federal tax amendment Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value When To DeductChecks. 2012 federal tax amendment Text message. 2012 federal tax amendment Credit card. 2012 federal tax amendment Pay-by-phone account. 2012 federal tax amendment Stock certificate. 2012 federal tax amendment Promissory note. 2012 federal tax amendment Option. 2012 federal tax amendment Borrowed funds. 2012 federal tax amendment Limits on DeductionsCarryovers Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To Report Introduction This chapter explains how to claim a deduction for your charitable contributions. 2012 federal tax amendment It discusses the following topics. 2012 federal tax amendment The types of organizations to which you can make deductible charitable contributions. 2012 federal tax amendment The types of contributions you can deduct. 2012 federal tax amendment How much you can deduct. 2012 federal tax amendment What records you must keep. 2012 federal tax amendment How to report your charitable contributions. 2012 federal tax amendment A charitable contribution is a donation or gift to, or for the use of, a qualified organization. 2012 federal tax amendment It is voluntary and is made without getting, or expecting to get, anything of equal value. 2012 federal tax amendment Form 1040 required. 2012 federal tax amendment    To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. 2012 federal tax amendment The amount of your deduction may be limited if certain rules and limits explained in this chapter apply to you. 2012 federal tax amendment The limits are explained in detail in Publication 526. 2012 federal tax amendment Useful Items - You may want to see: Publication 526 Charitable Contributions 561 Determining the Value of Donated Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 8283 Noncash Charitable Contributions Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. 2012 federal tax amendment Most organizations other than churches and governments must apply to the IRS to become a qualified organization. 2012 federal tax amendment How to check whether an organization can receive deductible charitable contributions. 2012 federal tax amendment   You can ask any organization whether it is a qualified organization, and most will be able to tell you. 2012 federal tax amendment Or go to IRS. 2012 federal tax amendment gov. 2012 federal tax amendment Click on “Tools” and then on “Exempt Organizations Select Check” (www. 2012 federal tax amendment irs. 2012 federal tax amendment gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). 2012 federal tax amendment This online tool will enable you to search for qualified organizations. 2012 federal tax amendment You can also call the IRS to find out if an organization is qualified. 2012 federal tax amendment Call 1-877-829-5500. 2012 federal tax amendment People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. 2012 federal tax amendment Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. 2012 federal tax amendment gsa. 2012 federal tax amendment gov/fedrelay. 2012 federal tax amendment Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. 2012 federal tax amendment A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). 2012 federal tax amendment It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. 2012 federal tax amendment Certain organizations that foster national or international amateur sports competition also qualify. 2012 federal tax amendment War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). 2012 federal tax amendment Domestic fraternal societies, orders, and associations operating under the lodge system. 2012 federal tax amendment (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. 2012 federal tax amendment ) Certain nonprofit cemetery companies or corporations. 2012 federal tax amendment (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. 2012 federal tax amendment ) The United States or any state, the District of Columbia, a U. 2012 federal tax amendment S. 2012 federal tax amendment possession (including Puerto Rico), a political subdivision of a state or U. 2012 federal tax amendment S. 2012 federal tax amendment possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. 2012 federal tax amendment (Your contribution to this type of organization is only deductible if it is to be used solely for public purposes. 2012 federal tax amendment ) Examples. 2012 federal tax amendment    The following list gives some examples of qualified organizations. 2012 federal tax amendment Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. 2012 federal tax amendment Most nonprofit charitable organizations such as the American Red Cross and the United Way. 2012 federal tax amendment Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. 2012 federal tax amendment This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. 2012 federal tax amendment However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . 2012 federal tax amendment Nonprofit hospitals and medical research organizations. 2012 federal tax amendment Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. 2012 federal tax amendment Nonprofit volunteer fire companies. 2012 federal tax amendment Nonprofit organizations that develop and maintain public parks and recreation facilities. 2012 federal tax amendment Civil defense organizations. 2012 federal tax amendment Certain foreign charitable organizations. 2012 federal tax amendment   Under income tax treaties with Canada, Israel, and Mexico, you may be able to deduct contributions to certain Canadian, Israeli, or Mexican charitable organizations. 2012 federal tax amendment Generally, you must have income from sources in that country. 2012 federal tax amendment For additional information on the deduction of contributions to Canadian charities, see Publication 597, Information on the United States–Canada Income Tax Treaty. 2012 federal tax amendment If you need more information on how to figure your contribution to Mexican and Israeli charities, see Publication 526. 2012 federal tax amendment Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. 2012 federal tax amendment A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. 2012 federal tax amendment The contributions must be made to a qualified organization and not set aside for use by a specific person. 2012 federal tax amendment If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. 2012 federal tax amendment See Contributions of Property , later in this chapter. 2012 federal tax amendment Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. 2012 federal tax amendment See Limits on Deductions , later. 2012 federal tax amendment In addition, the total of your charitable contribution deduction and certain other itemized deductions may be limited. 2012 federal tax amendment See chapter 29. 2012 federal tax amendment Table 24-1 gives examples of contributions you can and cannot deduct. 2012 federal tax amendment Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. 2012 federal tax amendment Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. 2012 federal tax amendment If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. 2012 federal tax amendment For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. 2012 federal tax amendment Example 1. 2012 federal tax amendment You pay $65 for a ticket to a dinner-dance at a church. 2012 federal tax amendment Your entire $65 payment goes to the church. 2012 federal tax amendment The ticket to the dinner-dance has a fair market value of $25. 2012 federal tax amendment When you buy your ticket, you know that its value is less than your payment. 2012 federal tax amendment To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). 2012 federal tax amendment You can deduct $40 as a contribution to the church. 2012 federal tax amendment Example 2. 2012 federal tax amendment At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. 2012 federal tax amendment The amount you pay is no more than the fair rental value. 2012 federal tax amendment You have not made a deductible charitable contribution. 2012 federal tax amendment Athletic events. 2012 federal tax amendment   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. 2012 federal tax amendment   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. 2012 federal tax amendment Subtract the price of the tickets from your payment. 2012 federal tax amendment You can deduct 80% of the remaining amount as a charitable contribution. 2012 federal tax amendment Example 1. 2012 federal tax amendment You pay $300 a year for membership in a university's athletic scholarship program. 2012 federal tax amendment The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. 2012 federal tax amendment You can deduct $240 (80% of $300) as a charitable contribution. 2012 federal tax amendment Table 24-1. 2012 federal tax amendment Examples of Charitable Contributions—A Quick Check Use the following lists for a quick check of whether you can deduct a contribution. 2012 federal tax amendment See the rest of this chapter for more information and additional rules and limits that may apply. 2012 federal tax amendment Deductible As  Charitable Contributions Not Deductible  As Charitable Contributions Money or property you give to:  Churches, synagogues, temples, mosques, and other religious organizations Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park) Nonprofit schools and hospitals The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc. 2012 federal tax amendment War veterans groups   Expenses paid for a student living with you, sponsored by a qualified organization  Out-of-pocket expenses when you serve a qualified organization as a volunteer Money or property you give to:  Civic leagues, social and sports clubs, labor unions, and chambers of commerce Foreign organizations (except certain Canadian, Israeli, and Mexican charities) Groups that are run for personal profit Groups whose purpose is to lobby for law changes Homeowners' associations Individuals Political groups or candidates for public office   Cost of raffle, bingo, or lottery tickets  Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups  Tuition  Value of your time or services  Value of blood given to a blood bank    Example 2. 2012 federal tax amendment The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. 2012 federal tax amendment You must subtract the usual price of a ticket ($120) from your $300 payment. 2012 federal tax amendment The result is $180. 2012 federal tax amendment Your deductible charitable contribution is $144 (80% of $180). 2012 federal tax amendment Charity benefit events. 2012 federal tax amendment   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. 2012 federal tax amendment   If there is an established charge for the event, that charge is the value of your benefit. 2012 federal tax amendment If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. 2012 federal tax amendment Whether you use the tickets or other privileges has no effect on the amount you can deduct. 2012 federal tax amendment However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. 2012 federal tax amendment    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. 2012 federal tax amendment If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. 2012 federal tax amendment Example. 2012 federal tax amendment You pay $40 to see a special showing of a movie for the benefit of a qualified organization. 2012 federal tax amendment Printed on the ticket is “Contribution—$40. 2012 federal tax amendment ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). 2012 federal tax amendment Membership fees or dues. 2012 federal tax amendment    You may be able to deduct membership fees or dues you pay to a qualified organization. 2012 federal tax amendment However, you can deduct only the amount that is more than the value of the benefits you receive. 2012 federal tax amendment    You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. 2012 federal tax amendment They are not qualified organizations. 2012 federal tax amendment Certain membership benefits can be disregarded. 2012 federal tax amendment   Both you and the organization can disregard the following membership benefits if you receive them in return for an annual payment of $75 or less. 2012 federal tax amendment Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. 2012 federal tax amendment Admission, while you are a member, to events open only to members of the organization, if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. 2012 federal tax amendment 20. 2012 federal tax amendment Token items. 2012 federal tax amendment   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. 2012 federal tax amendment You receive only a small item or other benefit of token value. 2012 federal tax amendment The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. 2012 federal tax amendment Written statement. 2012 federal tax amendment   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. 2012 federal tax amendment The statement must say that you can deduct only the amount of your payment that is more than the value of the goods or services you received. 2012 federal tax amendment It must also give you a good faith estimate of the value of those goods or services. 2012 federal tax amendment   The organization can give you the statement either when it solicits or when it receives the payment from you. 2012 federal tax amendment Exception. 2012 federal tax amendment   An organization will not have to give you this statement if one of the following is true. 2012 federal tax amendment The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. 2012 federal tax amendment You receive only items whose value is not substantial as described under Token items , earlier. 2012 federal tax amendment You receive only membership benefits that can be disregarded, as described earlier. 2012 federal tax amendment Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. 2012 federal tax amendment You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization as part of a program of the organization to provide educational opportunities for the student, Is not your relative or dependent, and Is a full-time student in the twelfth or any lower grade at a school in the United States. 2012 federal tax amendment You can deduct up to $50 a month for each full calendar month the student lives with you. 2012 federal tax amendment Any month when conditions (1) through (3) are met for 15 days or more counts as a full month. 2012 federal tax amendment For additional information, see Expenses Paid for Student Living With You in Publication 526. 2012 federal tax amendment Mutual exchange program. 2012 federal tax amendment   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. 2012 federal tax amendment Table 24-2. 2012 federal tax amendment Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. 2012 federal tax amendment All of the rules explained in this chapter also apply. 2012 federal tax amendment See, in particular, Out-of-Pocket Expenses in Giving Services . 2012 federal tax amendment Question Answer I volunteer 6 hours a week in the office of a qualified organization. 2012 federal tax amendment The receptionist is paid $10 an hour for the same work. 2012 federal tax amendment Can I deduct $60 a week for my time?    No, you cannot deduct the value of your time or services. 2012 federal tax amendment The office is 30 miles from my home. 2012 federal tax amendment Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. 2012 federal tax amendment If you don't want to figure your actual costs, you can deduct 14 cents for each mile. 2012 federal tax amendment I volunteer as a Red Cross nurse's aide at a hospital. 2012 federal tax amendment Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. 2012 federal tax amendment I pay a babysitter to watch my children while I volunteer for a qualified organization. 2012 federal tax amendment Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. 2012 federal tax amendment (If you have childcare expenses so you can work for pay, see chapter 32. 2012 federal tax amendment ) Out-of-Pocket Expenses in Giving Services Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. 2012 federal tax amendment The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. 2012 federal tax amendment Table 24-2 contains questions and answers that apply to some individuals who volunteer their services. 2012 federal tax amendment Conventions. 2012 federal tax amendment   If a qualified organization selects you to attend a convention as its representative, you can deduct unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight in connection with the convention. 2012 federal tax amendment However, see Travel , later. 2012 federal tax amendment   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. 2012 federal tax amendment You also cannot deduct transportation, meals and lodging, and other expenses for your spouse or children. 2012 federal tax amendment    You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. 2012 federal tax amendment You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. 2012 federal tax amendment Uniforms. 2012 federal tax amendment   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. 2012 federal tax amendment Foster parents. 2012 federal tax amendment   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. 2012 federal tax amendment A qualified organization must select the individuals you take into your home for foster care. 2012 federal tax amendment    You can deduct expenses that meet both of the following requirements. 2012 federal tax amendment They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. 2012 federal tax amendment They are incurred primarily to benefit the qualified organization. 2012 federal tax amendment   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. 2012 federal tax amendment For details, see chapter 3. 2012 federal tax amendment Example. 2012 federal tax amendment You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. 2012 federal tax amendment Your unreimbursed expenses are not deductible as charitable contributions. 2012 federal tax amendment Car expenses. 2012 federal tax amendment   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving services to a charitable organization. 2012 federal tax amendment You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. 2012 federal tax amendment    If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. 2012 federal tax amendment   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. 2012 federal tax amendment   You must keep reliable written records of your car expenses. 2012 federal tax amendment For more information, see Car expenses under Records To Keep, later. 2012 federal tax amendment Travel. 2012 federal tax amendment   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. 2012 federal tax amendment This applies whether you pay the expenses directly or indirectly. 2012 federal tax amendment You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. 2012 federal tax amendment   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. 2012 federal tax amendment Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. 2012 federal tax amendment However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. 2012 federal tax amendment Example 1. 2012 federal tax amendment You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. 2012 federal tax amendment You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. 2012 federal tax amendment You participate in the activities of the group and enjoy your time with them. 2012 federal tax amendment You oversee the breaking of camp and you transport the group home. 2012 federal tax amendment You can deduct your travel expenses. 2012 federal tax amendment Example 2. 2012 federal tax amendment You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. 2012 federal tax amendment The project is sponsored by a charitable organization. 2012 federal tax amendment In most circumstances, you cannot deduct your expenses. 2012 federal tax amendment Example 3. 2012 federal tax amendment You work for several hours each morning on an archaeological dig sponsored by a charitable organization. 2012 federal tax amendment The rest of the day is free for recreation and sightseeing. 2012 federal tax amendment You cannot take a charitable contribution deduction even though you work very hard during those few hours. 2012 federal tax amendment Example 4. 2012 federal tax amendment You spend the entire day attending a charitable organization's regional meeting as a chosen representative. 2012 federal tax amendment In the evening you go to the theater. 2012 federal tax amendment You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. 2012 federal tax amendment Daily allowance (per diem). 2012 federal tax amendment   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. 2012 federal tax amendment You may be able to deduct any necessary travel expenses that are more than the allowance. 2012 federal tax amendment Deductible travel expenses. 2012 federal tax amendment   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. 2012 federal tax amendment Because these travel expenses are not business-related, they are not subject to the same limits as business-related expenses. 2012 federal tax amendment For information on business travel expenses, see Travel Expenses in chapter 26. 2012 federal tax amendment Contributions You Cannot Deduct There are some contributions you cannot deduct, such as those made to specific individuals and those made to nonqualified organizations. 2012 federal tax amendment (See Contributions to Individuals and Contributions to Nonqualified Organizations , next. 2012 federal tax amendment ) There are others you can deduct only part of, as discussed later under Contributions From Which You Benefit . 2012 federal tax amendment Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. 2012 federal tax amendment Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members. 2012 federal tax amendment Contributions to individuals who are needy or worthy. 2012 federal tax amendment You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. 2012 federal tax amendment But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. 2012 federal tax amendment Example. 2012 federal tax amendment You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. 2012 federal tax amendment However, you cannot deduct contributions earmarked for relief of a particular individual or family. 2012 federal tax amendment Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. 2012 federal tax amendment Expenses you paid for another person who provided services to a qualified organization. 2012 federal tax amendment Example. 2012 federal tax amendment Your son does missionary work. 2012 federal tax amendment You pay his expenses. 2012 federal tax amendment You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. 2012 federal tax amendment Payments to a hospital that are for a specific patient's care or for services for a specific patient. 2012 federal tax amendment You cannot deduct these payments even if the hospital is operated by a city, a state, or other qualified organization. 2012 federal tax amendment Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. 2012 federal tax amendment Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. 2012 federal tax amendment Chambers of commerce and other business leagues or organizations (but see chapter 28). 2012 federal tax amendment Civic leagues and associations. 2012 federal tax amendment Communist organizations. 2012 federal tax amendment Country clubs and other social clubs. 2012 federal tax amendment Most foreign organizations (other than certain Canadian, Israeli, or Mexican charitable organizations). 2012 federal tax amendment For details, see Publication 526. 2012 federal tax amendment Homeowners' associations. 2012 federal tax amendment Labor unions (but see chapter 28). 2012 federal tax amendment Political organizations and candidates. 2012 federal tax amendment Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. 2012 federal tax amendment See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. 2012 federal tax amendment These contributions include the following. 2012 federal tax amendment Contributions for lobbying. 2012 federal tax amendment This includes amounts that you earmark for use in, or in connection with, influencing specific legislation. 2012 federal tax amendment Contributions to a retirement home for room, board, maintenance, or admittance. 2012 federal tax amendment Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. 2012 federal tax amendment Costs of raffles, bingo, lottery, etc. 2012 federal tax amendment You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. 2012 federal tax amendment For information on how to report gambling winnings and losses, see Gambling winnings in chapter 12 and Gambling Losses Up to the Amount of Gambling Winnings in chapter 28. 2012 federal tax amendment Dues to fraternal orders and similar groups. 2012 federal tax amendment However, see Membership fees or dues , earlier, under Contributions You Can Deduct. 2012 federal tax amendment Tuition, or amounts you pay instead of tuition. 2012 federal tax amendment You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. 2012 federal tax amendment You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. 2012 federal tax amendment ” Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. 2012 federal tax amendment Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. 2012 federal tax amendment The cost of meals you eat while you perform services for a qualified organization unless it is necessary for you to be away from home overnight while performing the services. 2012 federal tax amendment Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final (but see Adoption Credit in chapter 37, and the instructions for Form 8839, Qualified Adoption Expenses). 2012 federal tax amendment You also may be able to claim an exemption for the child. 2012 federal tax amendment See Adopted child in chapter 3. 2012 federal tax amendment Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property (but see chapter 28). 2012 federal tax amendment Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. 2012 federal tax amendment However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. 2012 federal tax amendment See Giving Property That Has Increased in Value , later. 2012 federal tax amendment For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. 2012 federal tax amendment Clothing and household items. 2012 federal tax amendment   You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. 2012 federal tax amendment Exception. 2012 federal tax amendment   You can take a deduction for a contribution of an item of clothing or household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. 2012 federal tax amendment Household items. 2012 federal tax amendment   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. 2012 federal tax amendment   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. 2012 federal tax amendment Cars, boats, and airplanes. 2012 federal tax amendment    The following rules apply to any donation of a qualified vehicle. 2012 federal tax amendment A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. 2012 federal tax amendment Deduction more than $500. 2012 federal tax amendment   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. 2012 federal tax amendment If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. 2012 federal tax amendment Form 1098-C. 2012 federal tax amendment   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. 2012 federal tax amendment The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. 2012 federal tax amendment   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453 and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. 2012 federal tax amendment   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. 2012 federal tax amendment    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. 2012 federal tax amendment But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. 2012 federal tax amendment Filing deadline approaching and still no Form 1098-C. 2012 federal tax amendment   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. 2012 federal tax amendment Request an automatic 6-month extension of time to file your return. 2012 federal tax amendment You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. 2012 federal tax amendment S. 2012 federal tax amendment Individual Income Tax Return. 2012 federal tax amendment  For more information, see Automatic Extension in chapter 1. 2012 federal tax amendment File the return on time without claiming the deduction for the qualified vehicle. 2012 federal tax amendment After receiving the Form 1098-C, file an amended return, Form 1040X, claiming the deduction. 2012 federal tax amendment Attach Copy B of Form 1098-C (or other statement) to the amended return. 2012 federal tax amendment For more information about amended returns, see Amended Returns and Claims for Refund in chapter 1. 2012 federal tax amendment Exceptions. 2012 federal tax amendment   There are two exceptions to the rules just described for deductions of more than $500. 2012 federal tax amendment Exception 1—vehicle used or improved by organization. 2012 federal tax amendment   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. 2012 federal tax amendment But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 2012 federal tax amendment The Form 1098-C (or other statement) will show whether this exception applies. 2012 federal tax amendment Exception 2—vehicle given or sold to needy individual. 2012 federal tax amendment   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. 2012 federal tax amendment But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 2012 federal tax amendment The Form 1098-C (or other statement) will show whether this exception applies. 2012 federal tax amendment   This exception does not apply if the organization sells the vehicle at auction. 2012 federal tax amendment In that case, you cannot deduct the vehicle's fair market value. 2012 federal tax amendment Example. 2012 federal tax amendment Anita donates a used car to a qualified organization. 2012 federal tax amendment She bought it 3 years ago for $9,000. 2012 federal tax amendment A used car guide shows the fair market value for this type of car is $6,000. 2012 federal tax amendment However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. 2012 federal tax amendment Neither exception 1 nor exception 2 applies. 2012 federal tax amendment If Anita itemizes her deductions, she can deduct $2,900 for her donation. 2012 federal tax amendment She must attach Form 1098-C and Form 8283 to her return. 2012 federal tax amendment Deduction $500 or less. 2012 federal tax amendment   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. 2012 federal tax amendment But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 2012 federal tax amendment   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. 2012 federal tax amendment The statement must contain the information and meet the tests for an acknowledgment described under Deductions of At Least $250 But Not More Than $500 under Records To Keep, later. 2012 federal tax amendment Partial interest in property. 2012 federal tax amendment   Generally, you cannot deduct a charitable contribution of less than your entire interest in property. 2012 federal tax amendment Right to use property. 2012 federal tax amendment   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. 2012 federal tax amendment For exceptions and more information, see Partial Interest in Property Not in Trust in Publication 561. 2012 federal tax amendment Future interests in tangible personal property. 2012 federal tax amendment   You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. 2012 federal tax amendment Tangible personal property. 2012 federal tax amendment   This is any property, other than land or buildings, that can be seen or touched. 2012 federal tax amendment It includes furniture, books, jewelry, paintings, and cars. 2012 federal tax amendment Future interest. 2012 federal tax amendment   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. 2012 federal tax amendment Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. 2012 federal tax amendment Publication 561 contains a more complete discussion. 2012 federal tax amendment Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. 2012 federal tax amendment Used clothing and household items. 2012 federal tax amendment   The fair market value of used clothing and household goods is usually far less than what you paid for them when they were new. 2012 federal tax amendment   For used clothing, you should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. 2012 federal tax amendment See Household Goods in Publication 561 for information on the valuation of household goods, such as furniture, appliances, and linens. 2012 federal tax amendment Example. 2012 federal tax amendment Dawn Greene donated a coat to a thrift store operated by her church. 2012 federal tax amendment She paid $300 for the coat 3 years ago. 2012 federal tax amendment Similar coats in the thrift store sell for $50. 2012 federal tax amendment The fair market value of the coat is $50. 2012 federal tax amendment Dawn's donation is limited to $50. 2012 federal tax amendment Cars, boats, and airplanes. 2012 federal tax amendment   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. 2012 federal tax amendment Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. 2012 federal tax amendment The guides may be published monthly or seasonally and for different regions of the country. 2012 federal tax amendment These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. 2012 federal tax amendment The prices are not “official” and these publications are not considered an appraisal of any specific donated property. 2012 federal tax amendment But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. 2012 federal tax amendment   You can also find used car pricing information on the Internet. 2012 federal tax amendment Example. 2012 federal tax amendment You donate a used car in poor condition to a local high school for use by students studying car repair. 2012 federal tax amendment A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. 2012 federal tax amendment However, the guide shows the price for a private party sale of the car is only $750. 2012 federal tax amendment The fair market value of the car is considered to be $750. 2012 federal tax amendment Large quantities. 2012 federal tax amendment   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. 2012 federal tax amendment Giving Property That Has Decreased in Value If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. 2012 federal tax amendment You cannot claim a deduction for the difference between the property's basis and its fair market value. 2012 federal tax amendment Giving Property That Has Increased in Value If you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. 2012 federal tax amendment Your basis in property is generally what you paid for it. 2012 federal tax amendment See chapter 13 if you need more information about basis. 2012 federal tax amendment Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. 2012 federal tax amendment Ordinary income property. 2012 federal tax amendment   Property is ordinary income property if you would have recognized ordinary income or short-term capital gain had you sold it at fair market value on the date it was contributed. 2012 federal tax amendment Examples of ordinary income property are inventory, works of art created by the donor, manuscripts prepared by the donor, and capital assets (defined in chapter 14) held 1 year or less. 2012 federal tax amendment Amount of deduction. 2012 federal tax amendment   The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. 2012 federal tax amendment Generally, this rule limits the deduction to your basis in the property. 2012 federal tax amendment Example. 2012 federal tax amendment You donate stock you held for 5 months to your church. 2012 federal tax amendment The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). 2012 federal tax amendment Because the $200 of appreciation would be short-term capital gain if you sold the stock, your deduction is limited to $800 (fair market value minus the appreciation). 2012 federal tax amendment Capital gain property. 2012 federal tax amendment   Property is capital gain property if you would have recognized long-term capital gain had you sold it at fair market value on the date of the contribution. 2012 federal tax amendment It includes capital assets held more than 1 year, as well as certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. 2012 federal tax amendment Amount of deduction — general rule. 2012 federal tax amendment   When figuring your deduction for a contribution of capital gain property, you generally can use the fair market value of the property. 2012 federal tax amendment Exceptions. 2012 federal tax amendment   In certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. 2012 federal tax amendment Generally, this means reducing the fair market value to the property's cost or other basis. 2012 federal tax amendment Bargain sales. 2012 federal tax amendment   A bargain sale of property is a sale or exchange for less than the property's fair market value. 2012 federal tax amendment A bargain sale to a qualified organization is partly a charitable contribution and partly a sale or exchange. 2012 federal tax amendment A bargain sale may result in a taxable gain. 2012 federal tax amendment More information. 2012 federal tax amendment   For more information on donating appreciated property, see Giving Property That Has Increased in Value in Publication 526. 2012 federal tax amendment When To Deduct You can deduct your contributions only in the year you actually make them in cash or other property (or in a later carryover year, as explained later under Carryovers ). 2012 federal tax amendment This applies whether you use the cash or an accrual method of accounting. 2012 federal tax amendment Time of making contribution. 2012 federal tax amendment   Usually, you make a contribution at the time of its unconditional delivery. 2012 federal tax amendment Checks. 2012 federal tax amendment   A check you mail to a charity is considered delivered on the date you mail it. 2012 federal tax amendment Text message. 2012 federal tax amendment   Contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account. 2012 federal tax amendment Credit card. 2012 federal tax amendment    Contributions charged on your credit card are deductible in the year you make the charge. 2012 federal tax amendment Pay-by-phone account. 2012 federal tax amendment    Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount. 2012 federal tax amendment Stock certificate. 2012 federal tax amendment   A properly endorsed stock certificate is considered delivered on the date of mailing or other delivery to the charity or to the charity's agent. 2012 federal tax amendment However, if you give a stock certificate to your agent or to the issuing corporation for transfer to the name of the charity, your contribution is not delivered until the date the stock is transferred on the books of the corporation. 2012 federal tax amendment Promissory note. 2012 federal tax amendment   If you issue and deliver a promissory note to a charity as a contribution, it is not a contribution until you make the note payments. 2012 federal tax amendment Option. 2012 federal tax amendment    If you grant a charity an option to buy real property at a bargain price, it is not a contribution until the organization exercises the option. 2012 federal tax amendment Borrowed funds. 2012 federal tax amendment   If you contribute borrowed funds, you can deduct the contribution in the year you deliver the funds to the charity, regardless of when you repay the loan. 2012 federal tax amendment Limits on Deductions The amount you can deduct for charitable contributions cannot be more than 50% of your adjusted gross income (AGI). 2012 federal tax amendment Your deduction may be further limited to 30% or 20% of your AGI, depending on the type of property you give and the type of organization you give it to. 2012 federal tax amendment If your total contributions for the year are 20% or less of your AGI, these limits do not apply to you. 2012 federal tax amendment The limits are discussed in detail under Limits on Deductions in Publication 526. 2012 federal tax amendment A higher limit applies to certain qualified conservation contributions. 2012 federal tax amendment See Publication 526 for details. 2012 federal tax amendment Carryovers You can carry over any contributions you cannot deduct in the current year because they exceed your adjusted-gross-income limits. 2012 federal tax amendment You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time. 2012 federal tax amendment For more information, see Carryovers in Publication 526. 2012 federal tax amendment Records To Keep You must keep records to prove the amount of the contributions you make during the year. 2012 federal tax amendment The kind of records you must keep depends on the amount of your contributions and whether they are: Cash contributions, Noncash contributions, or Out-of-pocket expenses when donating your services. 2012 federal tax amendment Note. 2012 federal tax amendment An organization generally must give you a written statement if it receives a payment from you that is more than $75 and is partly a contribution and partly for goods or services. 2012 federal tax amendment (See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. 2012 federal tax amendment ) Keep the statement for your records. 2012 federal tax amendment It may satisfy all or part of the recordkeeping requirements explained in the following discussions. 2012 federal tax amendment Cash Contributions Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction. 2012 federal tax amendment You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following. 2012 federal tax amendment A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. 2012 federal tax amendment Bank records may include: A canceled check, A bank or credit union statement, or A credit card statement. 2012 federal tax amendment A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution. 2012 federal tax amendment The payroll deduction records described next. 2012 federal tax amendment Payroll deductions. 2012 federal tax amendment   If you make a contribution by payroll deduction, you must keep: A pay stub, Form W-2, or other document furnished by your employer that shows the date and amount of the contribution, and A pledge card or other document prepared by or for the qualified organization that shows the name of the organization. 2012 federal tax amendment If your employer withheld $250 or more from a single paycheck, see Contributions of $250 or More , next. 2012 federal tax amendment Contributions of $250 or More You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records. 2012 federal tax amendment If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions. 2012 federal tax amendment Amount of contribution. 2012 federal tax amendment   In figuring whether your contribution is $250 or more, do not combine separate contributions. 2012 federal tax amendment For example, if you gave your church $25 each week, your weekly payments do not have to be combined. 2012 federal tax amendment Each payment is a separate contribution. 2012 federal tax amendment   If contributions are made by payroll deduction, the deduction from each paycheck is treated as a separate contribution. 2012 federal tax amendment   If you made a payment that is partly for goods and services, as described earlier under Contributions From Which You Benefit , your contribution is the amount of the payment that is more than the value of the goods and services. 2012 federal tax amendment Acknowledgment. 2012 federal tax amendment   The acknowledgment must meet these tests. 2012 federal tax amendment It must be written. 2012 federal tax amendment It must include: The amount of cash you contributed, Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), A description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and A statement that the only benefit you received was an intangible religious benefit, if that was the case. 2012 federal tax amendment The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. 2012 federal tax amendment An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. 2012 federal tax amendment An example is admission to a religious ceremony. 2012 federal tax amendment You must get it on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. 2012 federal tax amendment   If the acknowledgment does not show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution. 2012 federal tax amendment If the acknowledgment shows the date of the contribution and meets the other tests just described, you do not need any other records. 2012 federal tax amendment Payroll deductions. 2012 federal tax amendment   If you make a contribution by payroll deduction and your employer withholds $250 or more from a single paycheck, you must keep: A pay stub, Form W-2, or other document furnished by your employer that shows the amount withheld as a contribution, and A pledge card or other document prepared by or for the qualified organization that shows the name of the organization and states the organization does not provide goods or services in return for any contribution made to it by payroll deduction. 2012 federal tax amendment A single pledge card may be kept for all contributions made by payroll deduction regardless of amount as long as it contains all the required information. 2012 federal tax amendment   If the pay stub, Form W-2, pledge card, or other document does not show the date of the contribution, you must have another document that does show the date of the contribution. 2012 federal tax amendment If the pay stub, Form W-2, pledge card, or other document shows the date of the contribution, you do not need any other records except those just described in (1) and (2). 2012 federal tax amendment Noncash Contributions For a contribution not made in cash, the records you must keep depend on whether your deduction for the contribution is: Less than $250, At least $250 but not more than $500, Over $500 but not more than $5,000, or Over $5,000. 2012 federal tax amendment Amount of deduction. 2012 federal tax amendment   In figuring whether your deduction is $500 or more, combine your claimed deductions for all similar items of property donated to any charitable organization during the year. 2012 federal tax amendment   If you received goods or services in return, as described earlier in Contributions From Which You Benefit , reduce your contribution by the value of those goods or services. 2012 federal tax amendment If you figure your deduction by reducing the fair market value of the donated property by its appreciation, as described earlier in Giving Property That Has Increased in Value , your contribution is the reduced amount. 2012 federal tax amendment Deductions of Less Than $250 If you make any noncash contribution, you must get and keep a receipt from the charitable organization showing: The name of the charitable organization, The date and location of the charitable contribution, and A reasonably detailed description of the property. 2012 federal tax amendment A letter or other written communication from the charitable organization acknowledging receipt of the contribution and containing the information in (1), (2), and (3) will serve as a receipt. 2012 federal tax amendment You are not required to have a receipt where it is impractical to get one (for example, if you leave property at a charity's unattended drop site). 2012 federal tax amendment Additional records. 2012 federal tax amendment   You must also keep reliable written records for each item of contributed property. 2012 federal tax amendment Your written records must include the following information. 2012 federal tax amendment The name and address of the organization to which you contributed. 2012 federal tax amendment The date and location of the contribution. 2012 federal tax amendment A description of the property in detail reasonable under the circumstances. 2012 federal tax amendment For a security, keep the name of the issuer, the type of security, and whether it is regularly traded on a stock exchange or in an over-the-counter market. 2012 federal tax amendment The fair market value of the property at the time of the contribution and how you figured the fair market value. 2012 federal tax amendment If it was determined by appraisal, keep a signed copy of the appraisal. 2012 federal tax amendment The cost or other basis of the property, if you must reduce its fair market value by appreciation. 2012 federal tax amendment Your records should also include the amount of the reduction and how you figured it. 2012 federal tax amendment The amount you claim as a deduction for the tax year as a result of the contribution, if you contribute less than your entire interest in the property during the tax year. 2012 federal tax amendment Your records must include the amount you claimed as a deduction in any earlier years for contributions of other interests in this property. 2012 federal tax amendment They must also include the name and address of each organization to which you contributed the other interests, the place where any such tangible property is located or kept, and the name of any person in possession of the property, other than the organization to which you contributed it. 2012 federal tax amendment The terms of any conditions attached to the contribution of property. 2012 federal tax amendment Deductions of At Least $250 But Not More Than $500 If you claim a deduction of at least $250 but not more than $500 for a noncash charitable contribution, you must get and keep an acknowledgment of your contribution from the qualified organization. 2012 federal tax amendment If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows your total contributions. 2012 federal tax amendment The acknowledgment must contain the information in items (1) through (3) under Deductions of Less Than $250 , earlier, and your written records must include the information listed in that discussion under Additional records . 2012 federal tax amendment The acknowledgment must also meet these tests. 2012 federal tax amendment It must be written. 2012 federal tax amendment It must include: A description (but not necessarily the value) of any property you contributed, Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), and A description and good faith estimate of the value of any goods or services described in (b). 2012 federal tax amendment If the only benefit you received was an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in a commercial transaction outside the donative context, the acknowledgment must say so and does not need to describe or estimate the value of the benefit. 2012 federal tax amendment You must get it on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. 2012 federal tax amendment Deductions Over $500 You are required to give additional information if you claim a deduction over $500 for noncash charitable contributions. 2012 federal tax amendment See Records To Keep in Publication 526 for more information. 2012 federal tax amendment Out-of-Pocket Expenses If you give services to a qualified organization and have unreimbursed out-of-pocket expenses related to those services, the following two rules apply. 2012 federal tax amendment You must have adequate records to prove the amount of the expenses. 2012 federal tax amendment If any of your unreimbursed out-of-pocket expenses, considered separately, are $250 or more (for example, you pay $250 or more for an airline ticket to attend a convention of a qualified organization as a chosen representative), you must get an acknowledgment from the qualified organization that contains: A description of the services you provided, A statement of whether or not the organization provided you any goods or services to reimburse you for the expenses you incurred, A description and a good faith estimate of the value of any goods or services (other than intangible religious benefits) provided to reimburse you, and A statement that the only benefit you received was an intangible religious benefit, if that was the case. 2012 federal tax amendment The acknowledgment does not need to describe or estimate the value of an intangible religious benefit (defined earlier under Acknowledgment ). 2012 federal tax amendment You must get the acknowledgment on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. 2012 federal tax amendment Car expenses. 2012 federal tax amendment   If you claim expenses directly related to use of your car in giving services to a qualified organization, you must keep reliable written records of your expenses. 2012 federal tax amendment Whether your records are considered reliable depends on all the facts and circumstances. 2012 federal tax amendment Generally, they may be considered reliable if you made them regularly and at or near the time you had the expenses. 2012 federal tax amendment   For example, your records might show the name of the organization you were serving and the dates you used your car for a charitable purpose. 2012 federal tax amendment If you use the standard mileage rate of 14 cents a mile, your records must show the miles you drove your car for the charitable purpose. 2012 federal tax amendment If you deduct your actual expenses, your records must show the costs of operating the car that are directly related to a charitable purpose. 2012 federal tax amendment   See Car expenses under Out-of-Pocket Expenses in Giving Services, earlier, for the expenses you can deduct. 2012 federal tax amendment How To Report Report your charitable contributions on Schedule A (Form 1040). 2012 federal tax amendment If your total deduction for all noncash contributions for the year is over $500, you must also file Form 8283. 2012 federal tax amendment See How To Report in Publication 526 for more information. 2012 federal tax amendment Prev  Up  Next   Home   More Online Publications