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Tax Act 2012 Free

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Tax Act 2012 Free

Tax act 2012 free 10. Tax act 2012 free   Self-Employment (SE) Tax Table of Contents Who Must Pay SE Tax?Special Rules and Exceptions Figuring Earnings Subject to SE Tax Farm Optional Method Using Both Optional Methods Reporting Self-Employment Tax The SE tax rules apply no matter how old you are and even if you are already receiving social security and Medicare benefits. Tax act 2012 free Who Must Pay SE Tax? Generally, you must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Tax act 2012 free Use Schedule SE to figure net earnings from self-employment. Tax act 2012 free Sole proprietor or independent contractor. Tax act 2012 free   If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ (Form 1040) to figure your earnings subject to SE tax. Tax act 2012 free SE tax rate. Tax act 2012 free    For 2013, the SE tax rate on net earnings is 15. Tax act 2012 free 3% (12. Tax act 2012 free 4% social security tax plus 2. Tax act 2012 free 9% Medicare tax). Tax act 2012 free Maximum earnings subject to self-employment tax. Tax act 2012 free    Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Tax act 2012 free 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Tax act 2012 free   All of your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Tax act 2012 free 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Tax act 2012 free   If your wages and tips are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Tax act 2012 free 4% social security part of the SE tax on any of your net earnings. Tax act 2012 free However, you must pay the 2. Tax act 2012 free 9% Medicare part of the SE tax on all your net earnings. Tax act 2012 free Special Rules and Exceptions Aliens. Tax act 2012 free   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Tax act 2012 free S. Tax act 2012 free citizens. Tax act 2012 free Nonresident aliens are not subject to SE tax unless an international social security agreement in effect determines that they are covered under the U. Tax act 2012 free S. Tax act 2012 free social security system. Tax act 2012 free However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Tax act 2012 free S. Tax act 2012 free residents for self-employment tax purposes. Tax act 2012 free For more information on aliens, see Publication 519, U. Tax act 2012 free S. Tax act 2012 free Tax Guide for Aliens. Tax act 2012 free Child employed by parent. Tax act 2012 free   You are not subject to SE tax if you are under age 18 and you are working for your father or mother. Tax act 2012 free Church employee. Tax act 2012 free    If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108. Tax act 2012 free 28 or more in wages from the church or organization. Tax act 2012 free For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax act 2012 free Fishing crew member. Tax act 2012 free   If you are a member of the crew on a boat that catches fish or other water life, your earnings are subject to SE tax if all the following conditions apply. Tax act 2012 free You do not get any pay for the work except your share of the catch or a share of the proceeds from the sale of the catch, unless the pay meets all the following conditions. Tax act 2012 free The pay is not more than $100 per trip. Tax act 2012 free The pay is received only if there is a minimum catch. Tax act 2012 free The pay is solely for additional duties (such as mate, engineer, or cook) for which additional cash pay is traditional in the fishing industry. Tax act 2012 free You get a share of the catch or a share of the proceeds from the sale of the catch. Tax act 2012 free Your share depends on the amount of the catch. Tax act 2012 free The boat's operating crew normally numbers fewer than 10 individuals. Tax act 2012 free (An operating crew is considered as normally made up of fewer than 10 if the average size of the crew on trips made during the last four calendar quarters is fewer than 10. Tax act 2012 free ) Notary public. Tax act 2012 free   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ but are not subject to self-employment tax (see the Instructions for Schedule SE (Form 1040)). Tax act 2012 free State or local government employee. Tax act 2012 free   You are subject to SE tax if you are an employee of a state or local government, are paid solely on a fee basis, and your services are not covered under a federal-state social security agreement. Tax act 2012 free Foreign government or international organization employee. Tax act 2012 free   You are subject to SE tax if both the following conditions are true. Tax act 2012 free You are a U. Tax act 2012 free S. Tax act 2012 free citizen employed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands by: A foreign government, A wholly-owned agency of a foreign government, or An international organization. Tax act 2012 free Your employer is not required to withhold social security and Medicare taxes from your wages. Tax act 2012 free U. Tax act 2012 free S. Tax act 2012 free citizen or resident alien residing abroad. Tax act 2012 free    If you are a self-employed U. Tax act 2012 free S. Tax act 2012 free citizen or resident alien living outside the United States, in most cases you must pay SE tax. Tax act 2012 free Do not reduce your foreign earnings from self-employment by your foreign earned income exclusion. Tax act 2012 free Exception. Tax act 2012 free    The United States has social security agreements with many countries to eliminate double taxation under two social security systems. Tax act 2012 free Under these agreements, you generally must only pay social security and Medicare taxes to the country in which you live. Tax act 2012 free The country to which you must pay the tax will issue a certificate which serves as proof of exemption from social security tax in the other country. Tax act 2012 free   For more information, see the Instructions for Schedule SE (Form 1040). Tax act 2012 free More Than One Business If you have earnings subject to SE tax from more than one trade, business, or profession, you must combine the net profit (or loss) from each to determine your total earnings subject to SE tax. Tax act 2012 free A loss from one business reduces your profit from another business. Tax act 2012 free Community Property Income If any of the income from a trade or business, other than a partnership, is community property income under state law, it is included in the earnings subject to SE tax of the spouse carrying on the trade or business. Tax act 2012 free Gain or Loss Do not include in earnings subject to SE tax a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Tax act 2012 free It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. Tax act 2012 free Lost Income Payments If you are self-employed and reduce or stop your business activities, any payment you receive from insurance or other sources for the lost business income is included in earnings subject to SE tax. Tax act 2012 free If you are not working when you receive the payment, it still relates to your business and is included in earnings subject to SE tax, even though your business is temporarily inactive. Tax act 2012 free Figuring Earnings Subject to SE Tax Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Tax act 2012 free The regular method. Tax act 2012 free The nonfarm optional method. Tax act 2012 free The farm optional method. Tax act 2012 free You must use the regular method unless you are eligible to use one or both of the optional methods. Tax act 2012 free Why use an optional method?    You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Tax act 2012 free You want to receive credit for social security benefit coverage. Tax act 2012 free You incurred child or dependent care expenses for which you could claim a credit. Tax act 2012 free (An optional method may increase your earned income, which could increase your credit. Tax act 2012 free ) You are entitled to the earned income credit. Tax act 2012 free (An optional method may increase your earned income, which could increase your credit. Tax act 2012 free ) You are entitled to the additional child tax credit. Tax act 2012 free (An optional method may increase your earned income, which could increase your credit. Tax act 2012 free ) Effects of using an optional method. Tax act 2012 free   Using an optional method could increase your SE tax. Tax act 2012 free Paying more SE tax could result in your getting higher benefits when you retire. Tax act 2012 free   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller tax or no tax using the regular method. Tax act 2012 free   The optional methods may be used only to figure your SE tax. Tax act 2012 free To figure your income tax, include your actual earnings in gross income, regardless of which method you use to determine SE tax. Tax act 2012 free Regular Method Multiply your total earnings subject to SE tax by 92. Tax act 2012 free 35% (. Tax act 2012 free 9235) to get your net earnings under the regular method. Tax act 2012 free See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Tax act 2012 free Net earnings figured using the regular method are also called actual net earnings. Tax act 2012 free Nonfarm Optional Method Use the nonfarm optional method only for earnings that do not come from farming. Tax act 2012 free You may use this method if you meet all the following tests. Tax act 2012 free You are self-employed on a regular basis. Tax act 2012 free This means that your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Tax act 2012 free The net earnings can be from either farm or nonfarm earnings or both. Tax act 2012 free You have used this method less than 5 years. Tax act 2012 free (There is a 5-year lifetime limit. Tax act 2012 free ) The years do not have to be one after another. Tax act 2012 free Your net nonfarm profits were: Less than $5,024, and Less than 72. Tax act 2012 free 189% of your gross nonfarm income. Tax act 2012 free Net nonfarm profits. Tax act 2012 free   Net nonfarm profit generally is the total of the amounts from: Line 31, Schedule C (Form 1040), Line 3, Schedule C-EZ (Form 1040), Box 14, code A, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J1, Schedule K-1 (Form 1065-B). Tax act 2012 free   However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Tax act 2012 free Gross nonfarm income. Tax act 2012 free   Your gross nonfarm income generally is the total of the amounts from: Line 7, Schedule C (Form 1040), Line 1, Schedule C-EZ (Form 1040), Box 14, code C, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J2, Schedule K-1 (Form 1065-B). Tax act 2012 free Figuring Nonfarm Net Earnings If you meet the three tests explained earlier, use the following table to figure your net earnings from self-employment under the nonfarm optional method. Tax act 2012 free Table 10-1. Tax act 2012 free Figuring Nonfarm Net Earnings IF your gross nonfarm income is. Tax act 2012 free . Tax act 2012 free . Tax act 2012 free THEN your net earnings are equal to. Tax act 2012 free . Tax act 2012 free . Tax act 2012 free $6,960 or less Two-thirds of your gross nonfarm income. Tax act 2012 free More than $6,960 $4,640 Actual net earnings. Tax act 2012 free   Your actual net earnings are 92. Tax act 2012 free 35% of your total earnings subject to SE tax (that is, multiply total earnings subject to SE tax by 92. Tax act 2012 free 35% (. Tax act 2012 free 9235) to get actual net earnings). Tax act 2012 free Actual net earnings are equivalent to net earnings figured using the regular method. Tax act 2012 free Optional net earnings less than actual net earnings. Tax act 2012 free   You cannot use this method to report an amount less than your actual net earnings from self-employment. Tax act 2012 free Gross nonfarm income of $6,960 or less. Tax act 2012 free   The following examples illustrate how to figure net earnings when gross nonfarm income is $6,960 or less. Tax act 2012 free Example 1. Tax act 2012 free Net nonfarm profit less than $5,024 and less than 72. Tax act 2012 free 189% of gross nonfarm income. Tax act 2012 free Ann Green runs a craft business. Tax act 2012 free Her actual net earnings from self-employment were $800 in 2011 and $900 in 2012. Tax act 2012 free She meets the test for being self-employed on a regular basis. Tax act 2012 free She has used the nonfarm optional method less than 5 years. Tax act 2012 free Her gross income and net profit in 2013 are as follows: Gross nonfarm income $5,400 Net nonfarm profit $1,200 Ann's actual net earnings for 2013 are $1,108 ($1,200 × . Tax act 2012 free 9235). Tax act 2012 free Because her net profit is less than $5,024 and less than 72. Tax act 2012 free 189% of her gross income, she can use the nonfarm optional method to figure net earnings of $3,600 (2/3 × $5,400). Tax act 2012 free Because these net earnings are higher than her actual net earnings, she can report net earnings of $3,600 for 2013. Tax act 2012 free Example 2. Tax act 2012 free Net nonfarm profit less than $5,024 but not less than 72. Tax act 2012 free 189% of gross nonfarm income. Tax act 2012 free Assume that in Example 1 Ann's gross income is $1,000 and her net profit is $800. Tax act 2012 free She must use the regular method to figure her net earnings. Tax act 2012 free She cannot use the nonfarm optional method because her net profit is not less than 72. Tax act 2012 free 189% of her gross income. Tax act 2012 free Example 3. Tax act 2012 free Net loss from a nonfarm business. Tax act 2012 free Assume that in Example 1 Ann has a net loss of $700. Tax act 2012 free She can use the nonfarm optional method and report $3,600 (2/3 × $5,400) as her net earnings. Tax act 2012 free Example 4. Tax act 2012 free Nonfarm net earnings less than $400. Tax act 2012 free Assume that in Example 1 Ann has gross income of $525 and a net profit of $175. Tax act 2012 free In this situation, she would not pay any SE tax under either the regular method or the nonfarm optional method because her net earnings under both methods are less than $400. Tax act 2012 free Gross nonfarm income of more than $6,960. Tax act 2012 free   The following examples illustrate how to figure net earnings when gross nonfarm income is more than $6,960. Tax act 2012 free Example 1. Tax act 2012 free Net nonfarm profit less than $5,024 and less than 72. Tax act 2012 free 189% of gross nonfarm income. Tax act 2012 free John White runs an appliance repair shop. Tax act 2012 free His actual net earnings from self-employment were $10,500 in 2011 and $9,500 in 2012. Tax act 2012 free He meets the test for being self-employed on a regular basis. Tax act 2012 free He has used the nonfarm optional method less than 5 years. Tax act 2012 free His gross income and net profit in 2013 are as follows: Gross nonfarm income $12,000 Net nonfarm profit $1,200 John's actual net earnings for 2013 are $1,108 ($1,200 × . Tax act 2012 free 9235). Tax act 2012 free Because his net profit is less than $5,024 and less than 72. Tax act 2012 free 189% of his gross income, he can use the nonfarm optional method to figure net earnings of $4,640. Tax act 2012 free Because these net earnings are higher than his actual net earnings, he can report net earnings of $4,640 for 2013. Tax act 2012 free Example 2. Tax act 2012 free Net nonfarm profit not less than $5,024. Tax act 2012 free Assume that in Example 1 John's net profit is $5,400. Tax act 2012 free He must use the regular method. Tax act 2012 free He cannot use the nonfarm optional method because his net nonfarm profit is not less than $5,024. Tax act 2012 free Example 3. Tax act 2012 free Net loss from a nonfarm business. Tax act 2012 free Assume that in Example 1 John has a net loss of $700. Tax act 2012 free He can use the nonfarm optional method and report $4,640 as his net earnings from self-employment. Tax act 2012 free Farm Optional Method Use the farm optional method only for earnings from a farming business. Tax act 2012 free See Publication 225 for information about this method. Tax act 2012 free Using Both Optional Methods If you have both farm and nonfarm earnings, you may be able to use both optional methods to determine your net earnings from self-employment. Tax act 2012 free To figure your net earnings using both optional methods, you must: Figure your farm and nonfarm net earnings separately under each method. Tax act 2012 free Do not combine farm earnings with nonfarm earnings to figure your net earnings under either method. Tax act 2012 free Add the net earnings figured under each method to arrive at your total net earnings from self-employment. Tax act 2012 free You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Tax act 2012 free If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Tax act 2012 free Example. Tax act 2012 free You are a self-employed farmer. Tax act 2012 free You also operate a retail grocery store. Tax act 2012 free Your gross income, actual net earnings from self-employment, and optional farm and optional nonfarm net earnings from self-employment are shown in Table 10-2. Tax act 2012 free Table 10-2. Tax act 2012 free Example—Farm and Nonfarm Earnings Income and Earnings Farm Nonfarm Gross income $3,000 $6,000 Actual net earnings $900 $500 Optional net earnings (2/3 of gross income) $2,000 $4,000 Table 10-3 shows four methods or combinations of methods you can use to figure net earnings from self-employment using the farm and nonfarm gross income and actual net earnings shown in Table 10-2. Tax act 2012 free Method 1. Tax act 2012 free Using the regular method for both farm and nonfarm income. Tax act 2012 free Method 2. Tax act 2012 free Using the optional method for farm income and the regular method for nonfarm income. Tax act 2012 free Method 3. Tax act 2012 free Using the regular method for farm income and the optional method for nonfarm income. Tax act 2012 free Method 4. Tax act 2012 free Using the optional method for both farm and nonfarm income. Tax act 2012 free Note. Tax act 2012 free Actual net earnings is the same as net earnings figured using the regular method. Tax act 2012 free Table 10-3. Tax act 2012 free Example—Net Earnings Net Earnings 1 2 3 4 Actual  farm $ 900   $ 900   Optional  farm   $ 2,000   $ 2,000 Actual nonfarm $ 500 $ 500     Optional nonfarm     $4,000 $4,000 Amount you can report: $1,400 $2,500 $4,900 $4,640* *Limited to $4,640 because you used both optional methods. Tax act 2012 free Fiscal Year Filer If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Tax act 2012 free Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year. Tax act 2012 free Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Tax act 2012 free Then enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Tax act 2012 free Most taxpayers can use Section A—Short Schedule SE to figure their SE tax. Tax act 2012 free However, certain taxpayers must use Section B—Long Schedule SE. Tax act 2012 free If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. Tax act 2012 free Joint return. Tax act 2012 free   Even if you file a joint return, you cannot file a joint Schedule SE. Tax act 2012 free This is true whether one spouse or both spouses have earnings subject to SE tax. Tax act 2012 free If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. Tax act 2012 free However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. Tax act 2012 free Attach both schedules to the joint return. Tax act 2012 free More than one business. Tax act 2012 free   If you have more than one trade or business, you must combine the net profit (or loss) from each business to figure your SE tax. Tax act 2012 free A loss from one business will reduce your profit from another business. Tax act 2012 free File one Schedule SE showing the earnings from self-employment, but file a separate Schedule C, C-EZ, or F for each business. Tax act 2012 free Example. Tax act 2012 free You are the sole proprietor of two separate businesses. Tax act 2012 free You operate a restaurant that made a net profit of $25,000. Tax act 2012 free You also have a cabinetmaking business that had a net loss of $500. Tax act 2012 free You must file a Schedule C for the restaurant showing your net profit of $25,000 and another Schedule C for the cabinetmaking business showing your net loss of $500. Tax act 2012 free You file Schedule SE showing total earnings subject to SE tax of $24,500. Tax act 2012 free Prev  Up  Next   Home   More Online Publications
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Minority Business Development Agency

By providing techincal assistance and access to capital, contract opportunities, and new markets, the Minority Business Development Agency promotes the growth of businesses owned and operated by members of the minority and Diaspora communities.

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Contact In-Person: MBDA Business Centers Near You

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Phone Number: (202) 482-0101

The Tax Act 2012 Free

Tax act 2012 free 24. Tax act 2012 free   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. Tax act 2012 free Household items. Tax act 2012 free Deduction more than $500. Tax act 2012 free Form 1098-C. Tax act 2012 free Filing deadline approaching and still no Form 1098-C. Tax act 2012 free Exception 1—vehicle used or improved by organization. Tax act 2012 free Exception 2—vehicle given or sold to needy individual. Tax act 2012 free Deduction $500 or less. Tax act 2012 free Right to use property. Tax act 2012 free Tangible personal property. Tax act 2012 free Future interest. Tax act 2012 free Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value When To DeductChecks. Tax act 2012 free Text message. Tax act 2012 free Credit card. Tax act 2012 free Pay-by-phone account. Tax act 2012 free Stock certificate. Tax act 2012 free Promissory note. Tax act 2012 free Option. Tax act 2012 free Borrowed funds. Tax act 2012 free 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. Tax act 2012 free It discusses the following topics. Tax act 2012 free The types of organizations to which you can make deductible charitable contributions. Tax act 2012 free The types of contributions you can deduct. Tax act 2012 free How much you can deduct. Tax act 2012 free What records you must keep. Tax act 2012 free How to report your charitable contributions. Tax act 2012 free A charitable contribution is a donation or gift to, or for the use of, a qualified organization. Tax act 2012 free It is voluntary and is made without getting, or expecting to get, anything of equal value. Tax act 2012 free Form 1040 required. Tax act 2012 free    To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. Tax act 2012 free The amount of your deduction may be limited if certain rules and limits explained in this chapter apply to you. Tax act 2012 free The limits are explained in detail in Publication 526. Tax act 2012 free 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. Tax act 2012 free Most organizations other than churches and governments must apply to the IRS to become a qualified organization. Tax act 2012 free How to check whether an organization can receive deductible charitable contributions. Tax act 2012 free   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Tax act 2012 free Or go to IRS. Tax act 2012 free gov. Tax act 2012 free Click on “Tools” and then on “Exempt Organizations Select Check” (www. Tax act 2012 free irs. Tax act 2012 free gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Tax act 2012 free This online tool will enable you to search for qualified organizations. Tax act 2012 free You can also call the IRS to find out if an organization is qualified. Tax act 2012 free Call 1-877-829-5500. Tax act 2012 free 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. Tax act 2012 free Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Tax act 2012 free gsa. Tax act 2012 free gov/fedrelay. Tax act 2012 free Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Tax act 2012 free 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). Tax act 2012 free 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. Tax act 2012 free Certain organizations that foster national or international amateur sports competition also qualify. Tax act 2012 free War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Tax act 2012 free Domestic fraternal societies, orders, and associations operating under the lodge system. Tax act 2012 free (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. Tax act 2012 free ) Certain nonprofit cemetery companies or corporations. Tax act 2012 free (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. Tax act 2012 free ) The United States or any state, the District of Columbia, a U. Tax act 2012 free S. Tax act 2012 free possession (including Puerto Rico), a political subdivision of a state or U. Tax act 2012 free S. Tax act 2012 free possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Tax act 2012 free (Your contribution to this type of organization is only deductible if it is to be used solely for public purposes. Tax act 2012 free ) Examples. Tax act 2012 free    The following list gives some examples of qualified organizations. Tax act 2012 free Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Tax act 2012 free Most nonprofit charitable organizations such as the American Red Cross and the United Way. Tax act 2012 free Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Tax act 2012 free 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. Tax act 2012 free 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 . Tax act 2012 free Nonprofit hospitals and medical research organizations. Tax act 2012 free Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Tax act 2012 free Nonprofit volunteer fire companies. Tax act 2012 free Nonprofit organizations that develop and maintain public parks and recreation facilities. Tax act 2012 free Civil defense organizations. Tax act 2012 free Certain foreign charitable organizations. Tax act 2012 free   Under income tax treaties with Canada, Israel, and Mexico, you may be able to deduct contributions to certain Canadian, Israeli, or Mexican charitable organizations. Tax act 2012 free Generally, you must have income from sources in that country. Tax act 2012 free For additional information on the deduction of contributions to Canadian charities, see Publication 597, Information on the United States–Canada Income Tax Treaty. Tax act 2012 free If you need more information on how to figure your contribution to Mexican and Israeli charities, see Publication 526. Tax act 2012 free Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Tax act 2012 free 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. Tax act 2012 free The contributions must be made to a qualified organization and not set aside for use by a specific person. Tax act 2012 free 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. Tax act 2012 free See Contributions of Property , later in this chapter. Tax act 2012 free 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. Tax act 2012 free See Limits on Deductions , later. Tax act 2012 free In addition, the total of your charitable contribution deduction and certain other itemized deductions may be limited. Tax act 2012 free See chapter 29. Tax act 2012 free Table 24-1 gives examples of contributions you can and cannot deduct. Tax act 2012 free 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. Tax act 2012 free Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Tax act 2012 free If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Tax act 2012 free For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Tax act 2012 free Example 1. Tax act 2012 free You pay $65 for a ticket to a dinner-dance at a church. Tax act 2012 free Your entire $65 payment goes to the church. Tax act 2012 free The ticket to the dinner-dance has a fair market value of $25. Tax act 2012 free When you buy your ticket, you know that its value is less than your payment. Tax act 2012 free To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Tax act 2012 free You can deduct $40 as a contribution to the church. Tax act 2012 free Example 2. Tax act 2012 free At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Tax act 2012 free The amount you pay is no more than the fair rental value. Tax act 2012 free You have not made a deductible charitable contribution. Tax act 2012 free Athletic events. Tax act 2012 free   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. Tax act 2012 free   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Tax act 2012 free Subtract the price of the tickets from your payment. Tax act 2012 free You can deduct 80% of the remaining amount as a charitable contribution. Tax act 2012 free Example 1. Tax act 2012 free You pay $300 a year for membership in a university's athletic scholarship program. Tax act 2012 free 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. Tax act 2012 free You can deduct $240 (80% of $300) as a charitable contribution. Tax act 2012 free Table 24-1. Tax act 2012 free Examples of Charitable Contributions—A Quick Check Use the following lists for a quick check of whether you can deduct a contribution. Tax act 2012 free See the rest of this chapter for more information and additional rules and limits that may apply. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free You must subtract the usual price of a ticket ($120) from your $300 payment. Tax act 2012 free The result is $180. Tax act 2012 free Your deductible charitable contribution is $144 (80% of $180). Tax act 2012 free Charity benefit events. Tax act 2012 free   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. Tax act 2012 free   If there is an established charge for the event, that charge is the value of your benefit. Tax act 2012 free If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Tax act 2012 free Whether you use the tickets or other privileges has no effect on the amount you can deduct. Tax act 2012 free However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Tax act 2012 free    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. Tax act 2012 free If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Tax act 2012 free Example. Tax act 2012 free You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Tax act 2012 free Printed on the ticket is “Contribution—$40. Tax act 2012 free ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Tax act 2012 free Membership fees or dues. Tax act 2012 free    You may be able to deduct membership fees or dues you pay to a qualified organization. Tax act 2012 free However, you can deduct only the amount that is more than the value of the benefits you receive. Tax act 2012 free    You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Tax act 2012 free They are not qualified organizations. Tax act 2012 free Certain membership benefits can be disregarded. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free 20. Tax act 2012 free Token items. Tax act 2012 free   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Tax act 2012 free You receive only a small item or other benefit of token value. Tax act 2012 free 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. Tax act 2012 free Written statement. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free It must also give you a good faith estimate of the value of those goods or services. Tax act 2012 free   The organization can give you the statement either when it solicits or when it receives the payment from you. Tax act 2012 free Exception. Tax act 2012 free   An organization will not have to give you this statement if one of the following is true. Tax act 2012 free 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. Tax act 2012 free You receive only items whose value is not substantial as described under Token items , earlier. Tax act 2012 free You receive only membership benefits that can be disregarded, as described earlier. Tax act 2012 free Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Tax act 2012 free 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. Tax act 2012 free You can deduct up to $50 a month for each full calendar month the student lives with you. Tax act 2012 free Any month when conditions (1) through (3) are met for 15 days or more counts as a full month. Tax act 2012 free For additional information, see Expenses Paid for Student Living With You in Publication 526. Tax act 2012 free Mutual exchange program. Tax act 2012 free   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. Tax act 2012 free Table 24-2. Tax act 2012 free Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Tax act 2012 free All of the rules explained in this chapter also apply. Tax act 2012 free See, in particular, Out-of-Pocket Expenses in Giving Services . Tax act 2012 free Question Answer I volunteer 6 hours a week in the office of a qualified organization. Tax act 2012 free The receptionist is paid $10 an hour for the same work. Tax act 2012 free Can I deduct $60 a week for my time?    No, you cannot deduct the value of your time or services. Tax act 2012 free The office is 30 miles from my home. Tax act 2012 free 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. Tax act 2012 free If you don't want to figure your actual costs, you can deduct 14 cents for each mile. Tax act 2012 free I volunteer as a Red Cross nurse's aide at a hospital. Tax act 2012 free 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. Tax act 2012 free I pay a babysitter to watch my children while I volunteer for a qualified organization. Tax act 2012 free 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. Tax act 2012 free (If you have childcare expenses so you can work for pay, see chapter 32. Tax act 2012 free ) 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. Tax act 2012 free 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. Tax act 2012 free Table 24-2 contains questions and answers that apply to some individuals who volunteer their services. Tax act 2012 free Conventions. Tax act 2012 free   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. Tax act 2012 free However, see Travel , later. Tax act 2012 free   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Tax act 2012 free You also cannot deduct transportation, meals and lodging, and other expenses for your spouse or children. Tax act 2012 free    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. Tax act 2012 free You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Tax act 2012 free Uniforms. Tax act 2012 free   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. Tax act 2012 free Foster parents. Tax act 2012 free   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. Tax act 2012 free A qualified organization must select the individuals you take into your home for foster care. Tax act 2012 free    You can deduct expenses that meet both of the following requirements. Tax act 2012 free They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Tax act 2012 free They are incurred primarily to benefit the qualified organization. Tax act 2012 free   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. Tax act 2012 free For details, see chapter 3. Tax act 2012 free Example. Tax act 2012 free You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Tax act 2012 free Your unreimbursed expenses are not deductible as charitable contributions. Tax act 2012 free Car expenses. Tax act 2012 free   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. Tax act 2012 free You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Tax act 2012 free    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. Tax act 2012 free   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Tax act 2012 free   You must keep reliable written records of your car expenses. Tax act 2012 free For more information, see Car expenses under Records To Keep, later. Tax act 2012 free Travel. Tax act 2012 free   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. Tax act 2012 free This applies whether you pay the expenses directly or indirectly. Tax act 2012 free You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Tax act 2012 free   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free Example 1. Tax act 2012 free You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Tax act 2012 free You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Tax act 2012 free You participate in the activities of the group and enjoy your time with them. Tax act 2012 free You oversee the breaking of camp and you transport the group home. Tax act 2012 free You can deduct your travel expenses. Tax act 2012 free Example 2. Tax act 2012 free You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Tax act 2012 free The project is sponsored by a charitable organization. Tax act 2012 free In most circumstances, you cannot deduct your expenses. Tax act 2012 free Example 3. Tax act 2012 free You work for several hours each morning on an archaeological dig sponsored by a charitable organization. Tax act 2012 free The rest of the day is free for recreation and sightseeing. Tax act 2012 free You cannot take a charitable contribution deduction even though you work very hard during those few hours. Tax act 2012 free Example 4. Tax act 2012 free You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Tax act 2012 free In the evening you go to the theater. Tax act 2012 free You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Tax act 2012 free Daily allowance (per diem). Tax act 2012 free   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. Tax act 2012 free You may be able to deduct any necessary travel expenses that are more than the allowance. Tax act 2012 free Deductible travel expenses. Tax act 2012 free   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. Tax act 2012 free Because these travel expenses are not business-related, they are not subject to the same limits as business-related expenses. Tax act 2012 free For information on business travel expenses, see Travel Expenses in chapter 26. Tax act 2012 free Contributions You Cannot Deduct There are some contributions you cannot deduct, such as those made to specific individuals and those made to nonqualified organizations. Tax act 2012 free (See Contributions to Individuals and Contributions to Nonqualified Organizations , next. Tax act 2012 free ) There are others you can deduct only part of, as discussed later under Contributions From Which You Benefit . Tax act 2012 free Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Tax act 2012 free Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members. Tax act 2012 free Contributions to individuals who are needy or worthy. Tax act 2012 free You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Tax act 2012 free 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. Tax act 2012 free Example. Tax act 2012 free You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Tax act 2012 free However, you cannot deduct contributions earmarked for relief of a particular individual or family. Tax act 2012 free Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Tax act 2012 free Expenses you paid for another person who provided services to a qualified organization. Tax act 2012 free Example. Tax act 2012 free Your son does missionary work. Tax act 2012 free You pay his expenses. Tax act 2012 free You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Tax act 2012 free Payments to a hospital that are for a specific patient's care or for services for a specific patient. Tax act 2012 free You cannot deduct these payments even if the hospital is operated by a city, a state, or other qualified organization. Tax act 2012 free Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Tax act 2012 free 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. Tax act 2012 free Chambers of commerce and other business leagues or organizations (but see chapter 28). Tax act 2012 free Civic leagues and associations. Tax act 2012 free Communist organizations. Tax act 2012 free Country clubs and other social clubs. Tax act 2012 free Most foreign organizations (other than certain Canadian, Israeli, or Mexican charitable organizations). Tax act 2012 free For details, see Publication 526. Tax act 2012 free Homeowners' associations. Tax act 2012 free Labor unions (but see chapter 28). Tax act 2012 free Political organizations and candidates. Tax act 2012 free 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. Tax act 2012 free See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Tax act 2012 free These contributions include the following. Tax act 2012 free Contributions for lobbying. Tax act 2012 free This includes amounts that you earmark for use in, or in connection with, influencing specific legislation. Tax act 2012 free Contributions to a retirement home for room, board, maintenance, or admittance. Tax act 2012 free Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Tax act 2012 free Costs of raffles, bingo, lottery, etc. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free Dues to fraternal orders and similar groups. Tax act 2012 free However, see Membership fees or dues , earlier, under Contributions You Can Deduct. Tax act 2012 free Tuition, or amounts you pay instead of tuition. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free ” 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. Tax act 2012 free Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Tax act 2012 free 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. Tax act 2012 free 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). Tax act 2012 free You also may be able to claim an exemption for the child. Tax act 2012 free See Adopted child in chapter 3. Tax act 2012 free 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). Tax act 2012 free 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. Tax act 2012 free However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Tax act 2012 free See Giving Property That Has Increased in Value , later. Tax act 2012 free 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. Tax act 2012 free Clothing and household items. Tax act 2012 free   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. Tax act 2012 free Exception. Tax act 2012 free   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. Tax act 2012 free Household items. Tax act 2012 free   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Tax act 2012 free   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Tax act 2012 free Cars, boats, and airplanes. Tax act 2012 free    The following rules apply to any donation of a qualified vehicle. Tax act 2012 free 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. Tax act 2012 free Deduction more than $500. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free Form 1098-C. Tax act 2012 free   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. Tax act 2012 free The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Tax act 2012 free   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. Tax act 2012 free   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Tax act 2012 free    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Tax act 2012 free But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Tax act 2012 free Filing deadline approaching and still no Form 1098-C. Tax act 2012 free   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Tax act 2012 free Request an automatic 6-month extension of time to file your return. Tax act 2012 free You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Tax act 2012 free S. Tax act 2012 free Individual Income Tax Return. Tax act 2012 free  For more information, see Automatic Extension in chapter 1. Tax act 2012 free File the return on time without claiming the deduction for the qualified vehicle. Tax act 2012 free After receiving the Form 1098-C, file an amended return, Form 1040X, claiming the deduction. Tax act 2012 free Attach Copy B of Form 1098-C (or other statement) to the amended return. Tax act 2012 free For more information about amended returns, see Amended Returns and Claims for Refund in chapter 1. Tax act 2012 free Exceptions. Tax act 2012 free   There are two exceptions to the rules just described for deductions of more than $500. Tax act 2012 free Exception 1—vehicle used or improved by organization. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free The Form 1098-C (or other statement) will show whether this exception applies. Tax act 2012 free Exception 2—vehicle given or sold to needy individual. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free The Form 1098-C (or other statement) will show whether this exception applies. Tax act 2012 free   This exception does not apply if the organization sells the vehicle at auction. Tax act 2012 free In that case, you cannot deduct the vehicle's fair market value. Tax act 2012 free Example. Tax act 2012 free Anita donates a used car to a qualified organization. Tax act 2012 free She bought it 3 years ago for $9,000. Tax act 2012 free A used car guide shows the fair market value for this type of car is $6,000. Tax act 2012 free However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Tax act 2012 free Neither exception 1 nor exception 2 applies. Tax act 2012 free If Anita itemizes her deductions, she can deduct $2,900 for her donation. Tax act 2012 free She must attach Form 1098-C and Form 8283 to her return. Tax act 2012 free Deduction $500 or less. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free Partial interest in property. Tax act 2012 free   Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Tax act 2012 free Right to use property. Tax act 2012 free   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Tax act 2012 free For exceptions and more information, see Partial Interest in Property Not in Trust in Publication 561. Tax act 2012 free Future interests in tangible personal property. Tax act 2012 free   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. Tax act 2012 free Tangible personal property. Tax act 2012 free   This is any property, other than land or buildings, that can be seen or touched. Tax act 2012 free It includes furniture, books, jewelry, paintings, and cars. Tax act 2012 free Future interest. Tax act 2012 free   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. Tax act 2012 free Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Tax act 2012 free Publication 561 contains a more complete discussion. Tax act 2012 free 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. Tax act 2012 free Used clothing and household items. Tax act 2012 free   The fair market value of used clothing and household goods is usually far less than what you paid for them when they were new. Tax act 2012 free   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. Tax act 2012 free See Household Goods in Publication 561 for information on the valuation of household goods, such as furniture, appliances, and linens. Tax act 2012 free Example. Tax act 2012 free Dawn Greene donated a coat to a thrift store operated by her church. Tax act 2012 free She paid $300 for the coat 3 years ago. Tax act 2012 free Similar coats in the thrift store sell for $50. Tax act 2012 free The fair market value of the coat is $50. Tax act 2012 free Dawn's donation is limited to $50. Tax act 2012 free Cars, boats, and airplanes. Tax act 2012 free   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Tax act 2012 free 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. Tax act 2012 free The guides may be published monthly or seasonally and for different regions of the country. Tax act 2012 free These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Tax act 2012 free The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Tax act 2012 free But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Tax act 2012 free   You can also find used car pricing information on the Internet. Tax act 2012 free Example. Tax act 2012 free You donate a used car in poor condition to a local high school for use by students studying car repair. Tax act 2012 free A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Tax act 2012 free However, the guide shows the price for a private party sale of the car is only $750. Tax act 2012 free The fair market value of the car is considered to be $750. Tax act 2012 free Large quantities. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free You cannot claim a deduction for the difference between the property's basis and its fair market value. Tax act 2012 free 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. Tax act 2012 free Your basis in property is generally what you paid for it. Tax act 2012 free See chapter 13 if you need more information about basis. Tax act 2012 free Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Tax act 2012 free Ordinary income property. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free Amount of deduction. Tax act 2012 free   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. Tax act 2012 free Generally, this rule limits the deduction to your basis in the property. Tax act 2012 free Example. Tax act 2012 free You donate stock you held for 5 months to your church. Tax act 2012 free The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). Tax act 2012 free 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). Tax act 2012 free Capital gain property. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free Amount of deduction — general rule. Tax act 2012 free   When figuring your deduction for a contribution of capital gain property, you generally can use the fair market value of the property. Tax act 2012 free Exceptions. Tax act 2012 free   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. Tax act 2012 free Generally, this means reducing the fair market value to the property's cost or other basis. Tax act 2012 free Bargain sales. Tax act 2012 free   A bargain sale of property is a sale or exchange for less than the property's fair market value. Tax act 2012 free A bargain sale to a qualified organization is partly a charitable contribution and partly a sale or exchange. Tax act 2012 free A bargain sale may result in a taxable gain. Tax act 2012 free More information. Tax act 2012 free   For more information on donating appreciated property, see Giving Property That Has Increased in Value in Publication 526. Tax act 2012 free 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 ). Tax act 2012 free This applies whether you use the cash or an accrual method of accounting. Tax act 2012 free Time of making contribution. Tax act 2012 free   Usually, you make a contribution at the time of its unconditional delivery. Tax act 2012 free Checks. Tax act 2012 free   A check you mail to a charity is considered delivered on the date you mail it. Tax act 2012 free Text message. Tax act 2012 free   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. Tax act 2012 free Credit card. Tax act 2012 free    Contributions charged on your credit card are deductible in the year you make the charge. Tax act 2012 free Pay-by-phone account. Tax act 2012 free    Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount. Tax act 2012 free Stock certificate. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free Promissory note. Tax act 2012 free   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. Tax act 2012 free Option. Tax act 2012 free    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. Tax act 2012 free Borrowed funds. Tax act 2012 free   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. Tax act 2012 free Limits on Deductions The amount you can deduct for charitable contributions cannot be more than 50% of your adjusted gross income (AGI). Tax act 2012 free 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. Tax act 2012 free If your total contributions for the year are 20% or less of your AGI, these limits do not apply to you. Tax act 2012 free The limits are discussed in detail under Limits on Deductions in Publication 526. Tax act 2012 free A higher limit applies to certain qualified conservation contributions. Tax act 2012 free See Publication 526 for details. Tax act 2012 free Carryovers You can carry over any contributions you cannot deduct in the current year because they exceed your adjusted-gross-income limits. Tax act 2012 free You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time. Tax act 2012 free For more information, see Carryovers in Publication 526. Tax act 2012 free Records To Keep You must keep records to prove the amount of the contributions you make during the year. Tax act 2012 free 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. Tax act 2012 free Note. Tax act 2012 free 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. Tax act 2012 free (See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Tax act 2012 free ) Keep the statement for your records. Tax act 2012 free It may satisfy all or part of the recordkeeping requirements explained in the following discussions. Tax act 2012 free Cash Contributions Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction. Tax act 2012 free You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following. Tax act 2012 free A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Tax act 2012 free Bank records may include: A canceled check, A bank or credit union statement, or A credit card statement. Tax act 2012 free 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. Tax act 2012 free The payroll deduction records described next. Tax act 2012 free Payroll deductions. Tax act 2012 free   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. Tax act 2012 free If your employer withheld $250 or more from a single paycheck, see Contributions of $250 or More , next. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free Amount of contribution. Tax act 2012 free   In figuring whether your contribution is $250 or more, do not combine separate contributions. Tax act 2012 free For example, if you gave your church $25 each week, your weekly payments do not have to be combined. Tax act 2012 free Each payment is a separate contribution. Tax act 2012 free   If contributions are made by payroll deduction, the deduction from each paycheck is treated as a separate contribution. Tax act 2012 free   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. Tax act 2012 free Acknowledgment. Tax act 2012 free   The acknowledgment must meet these tests. Tax act 2012 free It must be written. Tax act 2012 free 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. Tax act 2012 free The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. Tax act 2012 free An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. Tax act 2012 free An example is admission to a religious ceremony. Tax act 2012 free 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. Tax act 2012 free   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. Tax act 2012 free If the acknowledgment shows the date of the contribution and meets the other tests just described, you do not need any other records. Tax act 2012 free Payroll deductions. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free   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. Tax act 2012 free 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). Tax act 2012 free 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. Tax act 2012 free Amount of deduction. Tax act 2012 free   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. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free 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). Tax act 2012 free Additional records. Tax act 2012 free   You must also keep reliable written records for each item of contributed property. Tax act 2012 free Your written records must include the following information. Tax act 2012 free The name and address of the organization to which you contributed. Tax act 2012 free The date and location of the contribution. Tax act 2012 free A description of the property in detail reasonable under the circumstances. Tax act 2012 free 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. Tax act 2012 free The fair market value of the property at the time of the contribution and how you figured the fair market value. Tax act 2012 free If it was determined by appraisal, keep a signed copy of the appraisal. Tax act 2012 free The cost or other basis of the property, if you must reduce its fair market value by appreciation. Tax act 2012 free Your records should also include the amount of the reduction and how you figured it. Tax act 2012 free 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. Tax act 2012 free Your records must include the amount you claimed as a deduction in any earlier years for contributions of other interests in this property. Tax act 2012 free 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. Tax act 2012 free The terms of any conditions attached to the contribution of property. Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free 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 . Tax act 2012 free The acknowledgment must also meet these tests. Tax act 2012 free It must be written. Tax act 2012 free 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). Tax act 2012 free 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. Tax act 2012 free 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. Tax act 2012 free Deductions Over $500 You are required to give additional information if you claim a deduction over $500 for noncash charitable contributions. Tax act 2012 free See Records To Keep in Publication 526 for more information. Tax act 2012 free 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. Tax act 2012 free You must have adequate records to prove the amount of the expenses. Tax act 2012 free 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. Tax act 2012 free The acknowledgment does not need to describe or estimate the value of an intangible religious benefit (defined earlier under Acknowledgment ). Tax act 2012 free 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. Tax act 2012 free Car expenses. Tax act 2012 free   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. Tax act 2012 free Whether your records are considered reliable depends on all the facts and circumstances. Tax act 2012 free Generally, they may be considered reliable if you made them regularly and at or near the time you had the expenses. Tax act 2012 free   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. Tax act 2012 free 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. Tax act 2012 free If you deduct your actual expenses, your records must show the costs of operating the car that are directly related to a charitable purpose. Tax act 2012 free   See Car expenses under Out-of-Pocket Expenses in Giving Services, earlier, for the expenses you can deduct. Tax act 2012 free How To Report Report your charitable contributions on Schedule A (Form 1040). Tax act 2012 free If your total deduction for all noncash contributions for the year is over $500, you must also file Form 8283. Tax act 2012 free See How To Report in Publication 526 for more information. Tax act 2012 free Prev  Up  Next   Home   More Online Publications