Newspaper article THE JOURNAL RECORD

New Tax Rules Impact Charitable Contributions

Newspaper article THE JOURNAL RECORD

New Tax Rules Impact Charitable Contributions

Article excerpt

As Americans make their yearend charitable contributions over the next several weeks, they will be operating under a new set of rules.

The end of the year is a peak time for contributions, motivated by a mixture of holiday season altruism and tax-planning practicality. For most people, the end of December marks the deadline to increase their deductions, and thereby reduce their tax bill, for the year.

"Although the primary motive of giving is to support a charitable purpose, tax planning plays an important role," said the accounting firm of Coopers Lybrand in its booklet Charitable Giving in the 1990s.

This year, a new set of standards for documenting charitable contributions is in effect, having been enacted as part of the 1993 tax and budget bill.

The paperwork requirements have been increased, for instance, for any cash contribution of $250 or more.

At that level, "a canceled check is no longer sufficient," noted the Institute of Certified Financial Planners. "Now you must ask the charity for a written acknowledgement of the value of the gift, and that you received no goods or services in return.

"Religious organizations must state that contributors received only `intangible religious benefits.' "

Many charities and other organizations that receive significant numbers of contributions have responded to the new strictures by automatically providing receipts of this sort. So the burden of extra work on contributors is minimal.

The limit also can be avoided by splitting contributions into separate pieces of less than $250 each.

"If you make payroll deductions of $50 a month to United Way, for example, you don't need written documentation from them even though the total gift for the year is $600," the financial planners' institute noted.

But if you give property for which you deduct $500 or more, a separate Internal Revenue Service Form 8283 must be submitted to substantiate its value. …

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