Get the most out of your charitable donations

  • Published
  • By 1st Lt. Stephen Braunlich
  • 341st Missile Wing Chief of Legal Assistance and Preventative Law
MALMSTROM AIR FORCE BASE, Mont. --  In 2010, Americans gave more than $290 billion to charity. Much of this giving took place during the holidays. As that season approaches, and the Combined Federal Campaign kicks off, now is a good time to look at the tax laws surrounding charitable giving and tax deductible donations.

In order to deduct your donation, it must be made to a legitimate charity. These organizations will be organized under Section 501(c)(3) of the Internal Revenue Code, and include everything from fraternal organizations to religious groups. However, contributions to political organizations, political candidates, or specific individuals are not tax deductible. Political organization will frequently have an associated charity that is legitimate. In those cases, ask questions to figure out which group you're actually donating to.

It is also important to note that you cannot receive a benefit for your contribution. If it looks like you're buying something, you probably are. Sometimes, though, a charity might offer a thank you gift as a means of recognizing your donation. When this happens, you must deduct the fair market value of the gift from your donation. The fair market value is what the item would have been worth in a store. So if you donated $50 to youth sports and received a $10 movie ticket, you could only deduct $40 from your taxes.

Fair market value is also how to determine the value of donated furniture, books and other goods. For example, if you donated a desk to the Salvation Army, and it would have sold for $100 in a store, then you can take a $100 donation. However, any items should be in good condition or better to be deductible. Would you buy a beat up, falling apart microwave at a store? It is also important to note that special rules apply to donated vehicles.

Finally, the most important part of charitable giving is to keep good records. You will need to be able to defend your deduction if you are audited. To do this, you should keep bank statements or copies of checks you sent to a charity. One of the benefits of making a donation through the CFC's payroll deduction is that your Leave and Earnings Statement will track this for you. If you haven't been keeping track of your donations, ask the charity to send you a letter totaling your donations.

If you have any questions about charitable giving and taxes, please call the Legal Assistance office at 731-2878. If you would like to volunteer to help with next year's tax assistance program, please email at stephen.braunlich.2@malmstrom.af.mil.