Donations, Taxes and Network for Good: Putting Your Donations to Work
When you donate to your favorite charities and causes through Network for Good, you receive the benefit of knowing you're helping to make a difference. Not just that, doing that qualifies you for tax deductions too. In essence, your contribution can be called a tax return donation.
Here are some answers to common questions about charity and tax deductions. Network for Good provides this information for your convenience. As always, consult your own tax or financial advisor before making personal financial decisions.
When I make a charitable contribution on Network for Good, is that contribution tax-deductible? Absolutely! Every single charity featured on Network for Good qualifies for 501(c)(3) non-profit status from the IRS — and that means every donation you give counts as a tax-deductible donation*. It's one of the ways Network for Good makes giving easier and smarter for you. When you make a donation through our site, be sure to save and/or print the confirmation e-mail you receive from Network for Good for your tax records.
*With a Good Card, a gift card for charity, the purchase is tax deductible, but when the recipient redeems the Good Card it is not tax deductible for them.
I want my giving to be deductible for this tax year. Do I need to make a donation by a certain time? Yes. Any donation you made on or by midnight December 31, 2012 will qualify as a deduction for 2012. Any donations made in 2012 (even at 12:01 a.m. on New Year's Day) go towards the 2012 tax year. So if you want to qualify for the tax benefits of a given year, you'll want to make that donation before December 31 of that year. The good news is that you can donate on Network for Good any day of the week, 24 hours a day. So it's easy to get in that last-minute donation.
Do I need to itemize my tax return to get a deduction for charitable giving? Yes, you do. Donations are only tax-deductible if you itemize deductions on your tax return. When you file your taxes, you'll need to itemize your donations on the Schedule A of the 1040 form. Network for Good can help you keep track of your individual donations throughout the year with its innovative personal profile feature, which allows you to create a Donation History of the charities you have donated to, how much you've donated, and when.
Is it worth the time and effort to itemize just to get a deduction for charitable giving? The answer to that varies from person to person and is subject to phase outs at higher income levels. The following table shows the automatic deduction the IRS provides. While this is more than most people contribute to charity in a year, there are other items that are included in this amount such as including interest on a home mortgage, medical expenses and business expenses that exceed certain base amounts, state taxes withheld, and real estate taxes paid. Your charitable donations in the form of cash and volunteer mileage may help to lower your tax bill. As with any major tax decision, confer with your own tax or financial advisor so you're sure you get the most out of all your deductions.
How much can I legally deduct on my taxes for charitable contributions? You can only deduct the amount of a contribution given voluntarily, with no expectation of a commensurate return. Generally speaking, you may deduct up to 50% of your aggregate gross income — half of your total income, subject to income phase-outs. There are some specific types of donations (such as gifts of stock, or donations to certain types of organizations) that have lower percentage ceilings.
Additionally, if you receive a financial or economic benefit in return for making a gift, the payment is not a deductible charitable contribution except to the extent that it exceeds the fair market value of the benefit. For example, if you gave $100 to a museum and received a book in return that sells regularly for $25, you can claim $75 as a charitable deduction.
The IRS has a worksheet to help you determine how many of your donations are tax-deductible.
I want to donate as much as I can this year. How can I do that, taking my own needs and expenses into consideration? This would be a wonderful time to sit down with your own tax or financial advisor — he or she can help you decide how much you can give this year. There are also a number of online tools that can provide you with a rough estimate for giving, including the charitable giving calculator from the New Tithing Group.
I've heard that some donations aren't fully tax-deductible, even if they're to an IRS-recognized charity. Is that true? Some contributions can be tax-deductible for less than the donated amount if the charity provides you with something of substantive value in return. At Network for Good, we streamline the giving process so that 100% of your donation is tax-deductible — no worries about what's deductible and what's not.
When I donate, will I get a receipt? When you donate through Network for Good, you will always receive a confirmation e-mail, which will serve as your receipt. You also can print the confirmation page that appears on your computer screen after you've completed your contribution—that can also serve as a receipt. You should always keep a hard copy of your receipt for your tax records. For tax years before and including 2006, a canceled check or credit card receipt is allowed for any donation less than $250, with a receipt being required for those above that threshold. In 2007 and subsequent years, the $250 threshold has been eliminated and a receipt is required as support for any donation [see section 1217 of the Pension Act of 2006 - http://www.dol.gov/ebsa/pdf/ppa2006.pdf]. It is a good policy to obtain a receipt for any donation you make and most charities will issue one automatically.
Can I deduct expenses I incur from volunteering? Although individual taxpayers may not deduct the value of their volunteering services, some expenses incurred while volunteering, for example, travel expenses are deductible if they are not reimbursed by the charity. The mileage rate for charitable deductions for the 2008 tax year is 14 cents per mile plus tolls and parking. However, travel expenses are deductible only if there is no significant element of personal pleasure, recreation, or vacation associated with the travel and then limited to necessary lodging and meals while away from home overnight in rendering these services. For example, if you volunteered to help with a youth club campout, but visited friends along the way or spent time with your own family, you could not deduct these travel expenses.
When you file your taxes, you will need to itemize your tax return donations on Schedule A of the 1040 form. You can download this form and the instructions for how to fill it out from the IRS Web site.
Your charitable giving will help so many — and work to your advantage as well. We hope that you'll consider a donation this year, and let Network for Good make it easier to reap the benefits at tax time.