Publication 526 |
2001 Tax Year |
Contributions You Can Deduct
Generally, you can deduct your contributions of money or property
that you make to, or for the use of, a qualified organization. A gift
or contribution is "for the use of" a qualified organization when
it is held in a legally enforceable trust for the qualified
organization or in a similar legal arrangement.
The contributions must be made to a qualified organization and not
set aside for use by a specific person.
If you give property to a qualified organization, you generally can
deduct the fair market value of the property at the time of the
contribution. See Contributions of Property, later.
Your deduction for charitable contributions is generally limited to
50% of your adjusted gross income, but in some cases 20% and 30%
limits may apply. See Limits on Deductions, later.
The total of your charitable contributions deduction and certain
other itemized deductions may be limited. See the instructions for
Form 1040 for more information.
Table 1 in this publication lists some examples of
contributions you can deduct and some that you cannot deduct.
Contributions From
Which You Benefit
If you receive a benefit as a result of making a contribution to a
qualified organization, you can deduct only the amount of your
contribution that is more than the value of the benefit you
receive. Also see Contributions From Which You Benefit
under Contributions You Cannot Deduct, later.
If you pay more than fair market value to a qualified organization
for merchandise, goods, or services, the amount you pay that is more
than the value of the item can be a charitable contribution. For the
excess amount to qualify, you must pay it with the intent to make a
charitable contribution.
Example 1.
You pay $65 for a ticket to a dinner-dance at a church. All the
proceeds of the function go to the church. The ticket to the
dinner-dance has a fair market value of $25. When you buy your ticket,
you know that its value is less than your payment. To figure the
amount of your charitable contribution, you subtract the value of the
benefit you receive ($25) from your total payment ($65). You can
deduct $40 as a charitable contribution to the church.
Example 2.
At a fund-raising auction conducted by a charity, you pay $600 for
a week's stay at a beach house. The amount you pay is no more than the
fair rental value. You have not made a deductible charitable
contribution.
Athletic events.
If you make a payment to, or for the benefit of, a college or
university and, as a result, you receive the right to buy tickets to
an athletic event in the athletic stadium of the college or
university, you can deduct 80% of the payment as a charitable
contribution.
If any part of your payment is for tickets (rather than the right
to buy tickets), that part is not deductible. In that case, subtract
the price of the tickets from your payment. 80% of the remaining
amount is a charitable contribution.
Example 1.
You pay $300 a year for membership in an athletic scholarship
program maintained by a university (a qualified organization). The
only benefit of membership is that you have the right to buy one
season ticket for a seat in a designated area of the stadium at the
university's home football games. You can deduct $240 (80% of $300) as
a charitable contribution.
Example 2.
The facts are the same as in Example 1 except that your
$300 payment included the purchase of one season ticket for the stated
ticket price of $120. You must subtract the usual price of a ticket
($120) from your $300 payment. The result is $180. Your deductible
charitable contribution is $144 (80% of $180).
Charity benefit events.
If you pay a qualified organization more than fair market value for
the right to attend a charity ball, banquet, show, sporting event, or
other benefit event, you can deduct only the amount that is more than
the value of the privileges or other benefits you receive.
If there is an established charge for the event, that charge is the
value of your benefit. If there is no established charge, your
contribution is that part of your payment that is more than the
reasonable value of the right to attend the event. Whether you use the
tickets or other privileges has no effect on the amount you can
deduct. However, if you return the ticket to the qualified
organization for resale, you can deduct the entire amount you paid for
the ticket.
Even if the ticket or other evidence of payment indicates that the
payment is a "contribution," this does not mean you can deduct
the entire amount. If the ticket shows the price of admission and the
amount of the contribution, you can deduct the contribution amount.
Example.
You pay $40 to see a special showing of a movie for the benefit of
a qualified organization. Printed on the ticket is
"Contribution--$40." If the regular price for the movie is
$8, your contribution is $32 ($40 payment - $8 regular price).
Membership fees or dues.
You may be able to deduct membership fees or dues you pay to a
qualified organization. However, you can deduct only the amount that
is more than the value of the benefits you receive. You cannot deduct
dues, fees, or assessments paid to country clubs and other social
organizations. They are not qualified organizations.
Certain membership benefits can be disregarded.
Both you and the organization can disregard certain membership
benefits you get in return for an annual payment of $75 or less
to the qualified organization. You can pay more than $75 to the
organization if the organization does not require a larger payment for
you to get the benefits. The benefits covered under this rule are:
- Any rights or privileges, other than those discussed under
Athletic events, earlier, that you can use frequently while
you are a member, such as:
- Free or discounted admission to the organization's
facilities or events,
- Free or discounted parking,
- Preferred access to goods or services, and
- Discounts on the purchase of goods and services, and
- Admission, while you are a member, to events that are open
only to members of the organization if the organization reasonably
projects that the cost per person (excluding any allocated overhead)
is not more than a specified amount, which may be adjusted annually
for inflation. (This is the amount for low-cost articles given in the
annual revenue procedure with inflation adjusted amounts for the
current year. You can get this figure from the IRS.)
Token items.
You can deduct your entire payment to a qualified organization as a
charitable contribution if both of the following are true.
- You get a small item or other benefit of token value.
- The qualified organization correctly determines that the
value of the item or benefit you received is not substantial and
informs you that you can deduct your payment in full.
The organization determines whether the value of an item or
benefit is substantial by using Revenue Procedure 90-12 and
92-49 and the revenue procedure with the inflation adjusted
amounts for the current year.
Written statement.
A qualified organization must give you a written statement if you
make a payment to it that is more than $75 and is partly a
contribution and partly for goods or services. The statement must tell
you that you can deduct only the amount of your payment that is more
than the value of the goods or services you received. It must also
give you a good faith estimate of the value of those goods or
services.
The organization can give you the statement either when it solicits
or when it receives the payment from you.
Exception.
An organization will not have to give you this statement if one of
the following is true.
- The organization is:
- The type of organization described in (5) under Types
of Qualified Organizations, earlier, or
- Formed only for religious purposes, and the only benefit you
receive is an intangible religious benefit (such as admission to a
religious ceremony) that generally is not sold in commercial
transactions outside the donative context.
- You receive only items whose value is not substantial as
described under Token items, earlier.
- You receive only membership benefits that can be
disregarded, as described earlier.
Expenses Paid for
Student Living With You
You may be able to deduct some expenses of having a student live
with you. You can deduct qualifying expenses for a foreign
or American student who:
- Lives in your home under a written agreement between you and
a qualified organization (defined later) as part of a
program of the organization to provide educational opportunities for
the student,
- Is not your dependent or relative, and
- Is a full-time student in the twelfth or any lower grade at
a school in the United States.
You can deduct up to $50 a month for each full calendar month the
student lives with you. Any month when conditions (1) through (3)
above are met for 15 or more days counts as a full month.
Qualified organization.
For these purposes, a qualified organization can be any of the
organizations described earlier under Organizations That Qualify
To Receive Deductible Contributions, except those in (4) and
(5). For example, if you are providing a home for a student through a
state or local government agency, you cannot deduct your expenses as
charitable contributions.
Qualifying expenses.
Expenses that you may be able to deduct include the cost of books,
tuition, food, clothing, transportation, medical and dental care,
entertainment, and other amounts you actually spend for the well-being
of the student.
Expenses that do not qualify.
Depreciation on your home, the fair market value of lodging, and
similar items are not considered amounts spent by you. In addition,
general household expenses, such as taxes, insurance, repairs, etc.,
do not qualify for the deduction.
Reimbursed expenses.
If you are compensated or reimbursed for any part of the costs of
having a student living with you, you cannot deduct any of
your costs. However, if you are reimbursed for only an extraordinary
or a one-time item, such as a hospital bill or vacation trip, that you
paid in advance at the request of the student's parents or the
sponsoring organization, you can deduct your expenses for the student
for which you were not reimbursed.
Mutual exchange program.
You cannot deduct the costs of a foreign student living in your
home under a mutual exchange program through which your child will
live with a family in a foreign country.
Reporting expenses.
For a list of what you must file with your return if you deduct
expenses for a student living with you, see Reporting expenses
for student living with you under How To Report,
later.
Out-of-Pocket Expenses
in Giving Services
You may be able to deduct some amounts you pay in giving services
to a qualified organization. The amounts must be:
- Unreimbursed,
- Directly connected with the services,
- Expenses you had only because of the services you gave,
and
- Not personal, living, or family expenses.
Table 2 contains questions and answers that apply to
some individuals who volunteer their services.
Table 2 - Volunteers' Q & A
Underprivileged youths selected by charity.
You can deduct reasonable unreimbursed out-of-pocket expenses you
pay to allow underprivileged youths to attend athletic events, movies,
or dinners. The youths must be selected by a charitable organization
whose goal is to reduce juvenile delinquency. Your own similar
expenses in accompanying the youths are not deductible.
Conventions.
If you are a chosen representative attending a convention of a
qualified organization, you can deduct unreimbursed expenses for
travel and transportation, including a reasonable amount for meals and
lodging, while away from home overnight in connection with the
convention. However, see Travel, later.
You cannot deduct personal expenses for sightseeing, fishing
parties, theater tickets, or nightclubs. You also cannot deduct
travel, meals and lodging, and other expenses for your spouse or
children.
You cannot deduct your expenses in attending a church convention if
you go only as a member of your church rather than as a chosen
representative. You can deduct unreimbursed expenses that are directly
connected with giving services for your church during the convention.
Uniforms.
You can deduct the cost and upkeep of uniforms that are not
suitable for everyday use and that you must wear while performing
donated services for a charitable organization.
Foster parents.
You may be able to deduct as a charitable contribution some of the
costs of being a foster parent (foster care provider) if you have no
profit motive in providing the foster care and are not, in fact,
making a profit. A qualified organization must designate the
individuals you take into your home for foster care.
You can deduct expenses that meet both of the following
requirements.
- They are unreimbursed out-of-pocket expenses to feed,
clothe, and care for the foster child.
- They must be mainly to benefit the qualified
organization.
Unreimbursed expenses that you cannot deduct as charitable
contributions may be considered support provided by you in determining
whether you can claim the foster child as a dependent. For details,
see Publication 501,
Exemptions, Standard Deduction, and Filing
Information.
Example.
You cared for a foster child because you wanted to adopt her, not
to benefit the agency that placed her in your home. Your unreimbursed
expenses are not deductible as charitable contributions.
Church deacon.
You can deduct as a charitable contribution any unreimbursed
expenses you have while in a permanent diaconate program established
by your church. These expenses include the cost of vestments, books,
and transportation required in order to serve in the program as either
a deacon candidate or as an ordained deacon.
Car expenses.
You can deduct unreimbursed out-of-pocket expenses, such as the
cost of gas and oil, that are directly related to the use of your car
in giving services to a charitable organization. You cannot
deduct general repair and maintenance expenses, depreciation,
registration fees, or the costs of tires or insurance.
If you do not want to deduct your actual expenses, you can use a
standard mileage rate to figure your contribution. See the
instructions for Schedule A (Form 1040) to find the rate for the year
you claim the deduction.
You can deduct parking fees and tolls, whether you use your actual
expenses or the standard mileage rate.
You must keep reliable written records of your car expenses. For
more information, see Car expenses under Records To
Keep, later.
Travel.
Generally, you can claim a charitable contribution deduction for
travel expenses necessarily incurred while you are away from home
performing services for a charitable organization only if there is
no significant element of personal pleasure, recreation, or
vacation in the travel. This applies whether you pay the expenses
directly or indirectly. You are paying the expenses indirectly if you
make a payment to the charitable organization and the organization
pays for your travel expenses.
The deduction for travel expenses will not be denied simply because
you enjoy providing services to the charitable organization. Even if
you enjoy the trip, you can take a charitable contribution deduction
for your travel expenses if you are on duty in a genuine and
substantial sense throughout the trip. However, if you have only
nominal duties, or if for significant parts of the trip you do not
have any duties, you cannot deduct your travel expenses.
Example 1.
You are a troop leader for a tax-exempt youth group and take the
group on a camping trip. You are responsible for overseeing the set up
of the camp and for providing the adult supervision for other
activities during the entire trip. You participate in the activities
of the group and really enjoy your time with them. You oversee the
breaking of camp and you transport the group home. You can deduct your
travel expenses.
Example 2.
You sail from one island to another and spend 8 hours a day
counting whales and other forms of marine life. The project is
sponsored by a charitable organization. In most circumstances, you
cannot deduct your expenses.
Example 3.
You work for several hours each morning on an archeological dig
sponsored by a charitable organization. The rest of the day is free
for recreation and sightseeing. You cannot take a charitable
contribution deduction even though you work very hard during those few
hours.
Example 4.
You spend the entire day attending a charitable organization's
regional meeting as a chosen representative. In the evening you go to
the theater. You can claim your travel expenses as charitable
contributions, but you cannot claim the cost of your evening at the
theater.
Daily allowance (per diem).
If you provide services for a charitable organization and receive a
daily allowance to cover reasonable travel expenses, including meals
and lodging while away from home overnight, you must include in income
the amount of the allowance that is more than your deductible travel
expenses. You can deduct your necessary travel expenses that are more
than the allowance.
Deductible travel expenses.
These include:
- Air, rail, and bus transportation,
- Out-of-pocket expenses for your car,
- Taxi fares or other costs of transportation between the
airport or station and your hotel,
- Lodging costs, and
- The cost of meals.
Because these travel expenses are not business-related, they
are not subject to the same limits as business related expenses. For
information on business travel expenses, see Travel Expenses
in Publication 463,
Travel, Entertainment, Gift, and Car
Expenses.
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