A charitable donation is defined as a gift of cash or property made to a qualified nonprofit organization intended to support its mission without the donor receiving anything of value in return. In the video, Shane Tenny, CFP®, reviews what types of charitable gifts are and are not tax-deductible.
Transcript:
[00:00:04.860 --> 00:00:24.080] Hi, everyone. Shane Tenny here, managing partner at Spaugh Dameron Tenny, and I wanted to come and talk about philanthropy and charitable giving in light of the natural disasters, the hurricanes that our country has seen, and just so much need all around us.
[00:00:24.170 --> 00:00:41.140] I know that many of you have really had a heart for the people whose lives have been turned upside down, and I know many of you have given either money or time or participated in relief efforts.
[00:00:41.950 --> 00:00:55.889] While all of that does insurmountable good to the community around us. I do want to talk a little bit about the tax impact of the philanthropy and the charitable intentions that we have.
[00:00:56.200 --> 00:01:05.920] Shane Tenny: And specifically, I want to highlight 3 forms of giving that we see which do qualify for an income tax deduction.
[00:01:05.940 --> 00:01:14.430] And I want to talk about 3 very common forms of giving in philanthropy which do not qualify for a tax deduction.
[00:01:15.190 --> 00:01:36.820] So, first of all, giving money, giving investments, or giving products or merchandise or stuff to a public charity registered as a 501©3 organization all qualify for an income tax deduction.
[00:01:37.140 --> 00:02:16.859] If there's an organization you're aware of who is doing great work, and you make a cash donation either through their website or with a check or through some other means, that organization should provide you with a receipt showing the value that you contributed and that would be deductible on your income tax return.
If you itemize your deductions, likewise, the value of investments. If you donate appreciated stock or mutual funds, which I've talked about at length in other videos, the value of those investments on the day they're received is eligible for an income tax deduction.
[00:02:16.860 --> 00:02:55.540] I know that so many people have been involved in giving specific merchandise. Space heaters, chainsaws, bedding, and other household supplies, and the value of that merchandise if it is given to a public charity, is deductible to you, even if the charity, of course, then distributes it in the community or to specific families. The fact that you gave it to the charity, they will be able to provide you with a donation receipt showing the value or allowing you to input the value of what you donated. And all of that is eligible for an income tax deduction.
[00:02:56.620 --> 00:03:23.070] Now, with that said, let me differentiate that from 3 other forms of help we see that don't qualify, and that is most notably gifts to families directly or people directly giving money, giving equipment.
As I said, bedding, space heaters, or that sort of thing. If you give it to a person or a family that is not a public charity, it is not eligible for an income tax deduction.
[00:03:23.990 --> 00:03:46.050] Likewise, I know there are many folks doing really good work who have raised money for their efforts through GoFundMe. It's a tremendous organization. It's a great way to help stimulate the work of people with good intentions and skills. But GoFundMe contributions do not qualify for an income tax deduction either.
[00:03:46.500 --> 00:04:14.069] Finally, giving of your own time or skills is not deductible. So, regardless of how much time you have spent or even the expertise that you may bring to a crisis situation, the IRS does not allow you to deduct the value of that time or that expertise.
And so, those are 3 things that, of course, do a lot of good but just are not quantifiable for an income tax deduction.
[00:04:14.220 --> 00:04:48.620] So, I share this with you, partly to thank you for the heart you have for your communities and for the world around us that is in line with the very mission statement of our firm and the good that we want to inspire you and all our clients to engage in, and I hope through this you are now wiser and shrewder about how you're giving can impact your own income tax liability.
Thanks so much. And as always, if you have any questions, don't hesitate to reach out.
