Wednesday, June 27, 2012

Charitable Contributions You Cannot Deduct

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It is a base perception of population that any payment made to a charitable club is deductible from income. However there is a fine line between contributions made for personal cause and contributions made without any personal benefit. Irs has specifically disallowed charitable contributions made for personal benefit. Ignoring these may lead to fines, interests, penalties and tax audit. Be careful about these contributions.

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How is Charitable Contributions You Cannot Deduct

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Contributions to individuals - there are confident contributions which are treated as personal expenses.

a. If you lead to fraternal societies for paying medical or burial expenses of deceased members, they are not deductible.

b. If you make contributions for the relief of a singular personel or family, they are not eligible for deduction. Even if you lead to a noteworthy organization, indicating that the offering is for a definite man that will be your personal expense and not a charitable contribution. For example, you may make donations for disasters like flood relief to noteworthy organizations. However if you put a condition that the contributions are for a definite personel or group of individuals, they cannot be noteworthy for your tax deduction. In the same way, if you make offering to a hospital for taking care of a definite person, that offering is treated as your personal expense even though the hospital is operated by a city or state.

Contributions to non-qualified organizations - If you make contributions to organizations which are not noteworthy to receive tax deductible contributions, they are non-deductible. So your contributions to organizations like homeowners associations, labor unions, political organizations, civic leagues and associations, chambers of commerce, the state bar, communist organizations or foreign organizations which are not controlled by any U.S. Organizations are not noteworthy to be deducted as charitable contributions from your income.

Contributions from which you benefit - If you receive or expect to receive any financial benefit on making a offering (even to a noteworthy organization), you cannot deduct such offering from your income. Examples are - contributions for lobbying a singular legislation, cost of raffles, bingo, lottery, contributions to a seclusion home for room, board or admittance. Contributions which are indirectly benefiting you or your family members are also not eligible. So you make a offering to a charitable club and that money is used to buy a cash value life assurance course for the benefit to your family members, it is treated as your personal expense.

You cannot claim a deduction for confident noteworthy charitable distributions (Qcd). So if a distribution is made directly by a trustee of your personel seclusion arrangement (Ira), to confident noteworthy organizations they are not deductible unless you were of at least age of 70 ½ when the distribution was made and your total Qcds for that year are not exceeding 0,000.

Value of your time or services - If you make blood donations to the Red Cross or to blood banks or you offer to work as an unpaid volunteer for a noteworthy organization, the value of such services is not deductible.

Personal expenses - The expenses which are personal or incurred for the family are obviously non-deductible. For example, if you're away from home overnight while offering assistance to a noteworthy charitable organization, and you spend on your food while that period, that is your personal expense.

Appraisal fees - If you pay some fees to find out fair market value of the asset which you intend to donate, that is not deductible as charitable contributions. You can however, claim these expenses as miscellaneous itemized deduction on program A -Form 1040.

Contributions to a donor advised fund - If you donate to a fund and advice the fund on distributing or investing amounts held in the fund, such contributions are not deductible.

Partial interest in asset - you cannot deduct a offering of less than your entire interest in property.

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