NEW YORK — ‘Tis the season for giving — and subsequently lowering your 2008 tax bill. Bear in mind that not all charitable donations are considered equal by the Internal Revenue Service. When planning your year-end contributions, there are a few things to consider in order to maximize your deductions.
Consider donating this year to disaster-relief efforts in the Midwest.
Under the recently passed Heartland Disaster Tax Relief Act, taxpayers who itemize deductions can deduct up to 100 percent of their adjusted gross income, instead of the normal 50 percent limit, for qualifying cash contributions toward disaster-relief efforts in certain parts of Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska and Wisconsin. Contributions must be made by tonight.
Also, as part of the Emergency Economic Stabilization Act, the food-inventory giving incentive that expired in 2007 that permitted grocery stores, farmers, small businesses and restaurateurs to donate food and get the same enhanced tax deductions as corporations, has been extended through 2009.
Certain charitable contributions are not deductible.
These include money or property you give to most civic leagues, social and sports clubs, labor unions, many foreign organizations, homeowners associations, political groups or candidates for public office, and individuals.
When donating property and other assets, the IRS uses “fair market value,” defined as the price at which property would change hands between a willing buyer and a willing seller.
If you are giving away clothing and household items, they must be in good condition. The value of used items is often a lot less than what you paid for them new.
