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Setting A Realistic Budget

When I decided to budget a little more carefully, I had no idea how difficult it would be. Fortunately, I was able to talk with a few financial advisors who were able to point me in the right direction. One of the best pieces of advice I received was about setting a realistic budget. I learned how to effectively manage my money, so that I didn't have to worry about paying my bills or letting my accounts overdraft. This blog is designed to help people like me who have previously struggled with money. Check out these articles for financial advice that might help you to set a realistic budget.

Setting A Realistic Budget

Recordkeeping Requirements For Charitable Contributions

by Leo Austin

Tax filers who itemize deductions on their income tax return are entitled to deduct qualified charitable contributions. For most contributions, a written record must be generated at the time of the donation in order to claim a charitable deduction.

A cash donation is not deductible unless it is substantiated by a written record produced by the donee organization. A payment by check is the equivalent of cash, but it generates an acceptable written record for donations under $250. Even a canceled check is not sufficient substantiation for a single donation of $250 or more.

Cash contributions of $250 or more

The threshold at which written donee acknowledgment is required for all donations is $250. The threshold applies to each single donation, so separate checks for less than $250 each are adequate written documentation. If you contribute $250 or more with a single check, written acknowledgment from the charity is required.

Noncash contributions

The $250 threshold applies to noncash contributions as well. The allowable deduction for noncash property is its fair market value at the time of the donation. Written acknowledgment is required for all noncash contributions of $250 or more. The requirement also applies to contributions under $250, but there is an exception for donations made to an unattended drop box of a charity.

If it is impractical to obtain written acknowledgment for items left at a drop site, a receipt is not required if the value is under $250. For used clothing, the fair market value is the amount that the items would sell for in a thrift store. If the total of your noncash contributions for the year exceeds $500, an additional tax form is required.

Form 8283

IRS Form 8283 is used to report noncash charitable contribution deductions of more than $500. Form 8283 is filed with your Form 1040. The $500 threshold for Form 8283 is not per item. The threshold is for total noncash contributions.

Contribution adjustments

Donors sometimes receive some type of gift in exchange for a charitable contribution. Gifts include benefits such as a hotel stay or tickets to a sporting event. If you receive a benefit at the time of a donation, only the contribution amount in excess of the benefit is deductible. Token items, such as a calendar or a coffee mug, may be disregarded.

The donation of your personal time is not deductible. However, the cost of your transportation to perform volunteer work for a qualified charity is deductible. Expenses that you pay for equipment or supplies used in your charitable work are also deductible. Contact a tax preparation firm (like Balkcom Pearsall & Parrish CPA's PA) for more information about charitable donations.