Is that charitable contribution deductible?

With the enormous destruction that has occurred in Texas from Hurricane Harvey and now in Florida and other parts of the South from Hurricane Irma Americans have again responded in generous fashion by making significant contributions to the recovery and restoration efforts.

Although it may not be at the forefront of the decision to make a donation, there may be tax savings opportunities if the charitable contribution is made and documented in the proper fashion.

The first thing you should be aware of is that not all donations to these relief funds may qualify for a charitable contribution tax deduction. The contribution must be to an IRS qualified not for profit organization.

Donations to individuals will not qualify for a tax deduction. You cannot deduct contributions to individuals no matter how deserving. This would include handouts to the homeless or collections at the office or in your neighborhood for those experiencing hard times.

Only donations to qualified charitable organizations are deductible.

If you are not sure whether an organization is qualified, ask to obtain a copy of the determination letter from the Internal Revenue Service. Many reputable organizations will post their determination letter directly on their website. Keep in mind that churches, synagogues, temples and mosques are considered de facto charitable organizations and are eligible to receive deductible donations even if they are not on the list.

Donors can also confirm the organization’s status by calling the IRS at 877-829-5500.

For both the tax-deductible aspects as well as to ensure that the donation is actually achieving the desired outcome, it is important to verify the legitimacy of the organization that you are making the donation to. Times like these bring out the best in Americans, but

Donations to individuals will not qualify for a tax deduction. You cannot deduct contributions to individuals no matter how deserving. This would include handouts to the homeless or collections at the office or in your neighborhood for those experiencing hard times.

they can also bring out unscrupulous individuals who are trying to take advantage of the generosity of the American public.

In order to claim a charitable deduction on your tax return you must also itemize your deductions on Schedule A. To actually experience any real tax savings, the total of all itemized deductions must exceed the standard deduction. The standard deduction for 2017 is $12,700 for married filing jointly and $6,350 for the other filing statuses. In addition to charitable contributions other common itemized deductions include state and local taxes, real estate taxes, and mortgage interest.

In other words, the total of all of the itemized deductions must exceed the standard deduction for the specific filing status for there to be an actual tax benefit.

Another important, and often overlooked, requirement is to get a receipt.

Even if the donation is a cash donation you will need to get a receipt to support the deduction come tax time. The written receipt must include the date, the amount of the contribution and the organization that received the contribution. In addition, for any donations of $250 or more a written acknowledgement must be obtained and retained. You do not need to submit your documentation along with your tax return, but you do need to be prepared to provide it in the event of an audit.

You cannot deduct the value of your time, but you can deduct expenses incurred related to volunteering.

The IRS does not allow a charitable deduction for volunteering your services even if you can easily place a dollar value on those services. However, costs incurred to support the volunteering are deductible. As a Boy Scout leader, I am able to deduct my uniforms and other costs incurred to conduct the volunteering, but the actual value of my time cannot be deducted.

Americans are known in part for their generosity. In times like these we step up and help out those in need that were impacted by these natural disasters. It is important to make sure that you not only are contributing to a reputable organization, but that you maintain appropriate documentation so that come tax time you will be able to enjoy a small benefit from your generosity.

Paul Pahoresky is a partner in the accounting firm of JLP CPAs. He can be reached at 440-9741040x14 or at paul@ jlpcpas.com. Consult your tax advisor for your specific situation for additional information and guidance on these topics.