Frequently Requested Information About the Deductibility of Donations Made to the Sean
Noland Foundation (SNF), Unreimbursed Expenses Incurred in Performing Services for the SNF and
Appropriate Records To Keep To Substantiate the Same
The
Sean Noland Foundation is a tax-exempt, 501c3 organization, and therefore
donations to the SNF as well as unreimbursed expenses incurred by our
volunteers in rendering services to us are generally tax-deductible to the
extent that the donor or volunteer itemizes deductions on his/her income tax
return.
Persons
taking such charitable deductions are required by IRS regulations to keep
records to prove the amount of contributions they made to 501c3 organizations
like SNF during the year. The kind of records you must keep depends on the
amount of your contributions and whether they are cash or non-cash (i.e.
in-kind) contributions, and whether they are made in return for something or
not (i.e. quid pro quo). The following summary is intended to answer the
frequently asked questions that our donors and volunteers have regarding this
topic.
DISCLAIMER: By
accessing this information, you agree to use it at your own risk and
acknowledge that while it is based on our own understanding of current federal
rules and regulations, we are not engaged in the business of rendering legal or
accounting advice, we are not your counsel, and we neither guarantee nor assume
any liability for the accuracy of the information so provided or its fit to
your particular tax situation. You should consult your own attorney and/or
accountant to determine how the rules apply to your particular circumstances.
More detailed information can also be found in IRS Publication 526 (Charitable
Contributions) and IRS Publication 561 (Determining the Value of Donated Property)
which can be downloaded from the IRS website.
Contributions Consisting of Services Rendered
Contributions consisting of services rendered to a 501c3 organization are NOT deductible and
we therefore cannot issue you a tax receipt. These would include legal
services, accounting services, veterinary services and administrative services,
among others. The logic behind this is that for the donation to be deductible,
the phantom income would have to be recognized by the service provider.
Depending on the service provider’s adjustable gross income for the year (AGI),
that would result in either a wash (i.e. netting zero) or in the donor having
to pay income tax, since above a certain AGI, only a portion (and not 100%) of
your itemized deductions are actually deductible.
Cash
Contributions
Cash
contributions include those paid by cash, check, credit card, or payroll
deduction. They also include your out-of-pocket expenses incurred in rendering
services to SNF. Cash contributions are generally deductible in the year they
are made. A few additional rules apply to the deductibility of out-of-pocket
expenses and these are explained below. For a contribution made in cash, the
records you must keep depend on whether the contribution is (1) less than $250
or (2) $250 or more.
In
figuring whether your contribution is $250 or more, you do NOT combine separate
contributions. For example, if you give SNF a monthly contribution of $25, your
monthly payments do not have to be combined. Each payment is a separate
contribution. If contributions are made by payroll deduction, the deduction
from each paycheck is treated as a separate contribution. If you made a payment
that is partly for goods and services (i.e. a Quid Pro Quo donation, as
explained below), your contribution is the amount of the payment that is more
than the fair market value of the goods and services.
Cash Contributions of Less Than $250
For each cash contribution that is less than $250, you must keep
ONE of the following.
- If the payment was made by
check, EFT or credit card, either a canceled check, or a legible and
readable account statement that shows:
- If the
payment was by check — the check number, amount, date posted, and to whom
it was paid,
- If the
payment was by electronic funds transfer — the amount, date posted, and
to whom it was paid, or
- If the
payment was charged to a credit card — the amount, transaction date, and
to whom it was paid.
- If the payment was made in
cash, a receipt (or a letter or other written communication) from SNF
showing SNF’s name and the date and amount of your contribution.
- For out-of-pocket expenses we
can provide you with a signed Acknowledgment
of the services rendered if you use our forms and mail them in for
signature. This is not necessary, but does give you better records to
substantiate the deduction that you take on your tax returns.
Cash
Contributions of $250 or More
For
contributions of $250 or more, IRS rules require that you obtain a written
acknowledgement of your contribution from the 501c3 organization (in our case,
from SNF office located at 5101 Washington St, STE 8, Gurnee, IL 60031) or that
you keep certain payroll deduction records if you made the contribution via
payroll. If you make more than one contribution of $250 or more, you must have
either a separate acknowledgement for each or one acknowledgement that shows
your total contributions. The acknowledgment must indicate the amount contributed
and the date the contribution was made, must contain a statement as to whether
or not you received any goods or services as a result of your contribution
(other than token items and intangible benefits), and if you did, it must
contain a brief description of such goods/services and give you the charity’s
good faith estimate of their fair market value. We number and keep copies of
all receipts issued, so if you did not receive yours or have lost or misplaced
your copy, you can contact us and we will mail you a replacement copy.
If
you made your contribution by payroll deduction, you do not need a tax receipt
from SNF. You should however keep your pay stub(s), Form W-2, or other document
furnished by your employer that proves the amount withheld, and if the
contribution made was more than $250 you should get a letter confirming that
the organization does not provide goods or services in return for any
contribution made to it by payroll deduction. We are pleased to provide a
confirmation letter when appropriate.
Out-Of-Pocket
Expenses Incurred In Rendering Services To the Sean Noland Foundation
You
may be able to deduct some amounts you pay in rendering services to SNF. These
amounts are treated as cash donations but they do NOT have to be reflected in our
books and/or financial results. Per IRS rules, the amounts must be:
- Unreimbursed,
- Directly connected with the
services rendered,
- Expenses you had only because
of the services you gave, and
- Not personal, living, or family
expenses.
Examples
include photocopying charges, office supplies, postage used to mail SNF
packages or other SNF correspondence, cards used to send SNF thank yous to
donors, and certain travel expenses as further described below.
Other Travel
& Car Expenses
Generally,
you can claim a charitable contribution deduction for travel expenses
necessarily incurred while you are away from home performing services for SNF
only if there is NO SIGNIFICANT element of personal pleasure, recreation or
vacation in the travel. Note that feeling good about helping our causes,
enjoying providing services to SNF generally, and enjoying the trip are allowed
and do not affect the deductibility of the expenses incurred. Please note the
rules on mileage below.
Deductible
travel expenses include unreimbursed 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. Please note however, that for car expenses you can
deduct only those expenses that are directly related to the use of your car in
giving services to SNF, such as the cost of gas and depending on the
circumstances, oil, but not 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 of
14 cents a mile to figure your contribution. You can also 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 and trips. Your records
must show for each time you used your car for a charitable purpose, the name of
the organization you were serving (in our case, SNF) and the date you rendered
the service. If you use the standard mileage rate, your records must also show
the miles you drove your car for the charitable purpose. If you deduct your
actual expenses, your records must show the costs of operating the car that are
directly related to the charitable purpose.
Costs Of
Raffle Tickets, Bingo, Lottery, Etc.
Please
note that with two exceptions, you CANNOT deduct as a charitable contribution
the amounts that you pay to buy raffle or lottery tickets or to play bingo or
other games of chance. What the charity chooses to call the ticket payment
(donation or otherwise) is irrelevant. The two exceptions that would allow you
to deduct the price paid for a raffle ticket as a charitable donation are (1)
if you return the ticket to the charity before the raffle is held, or (2) if
the charity has a Give Back The Prize option and you elect that as your prize
at the time you purchase the ticket. If the charity mistakenly gives you a
donation receipt for your raffle ticket purchase and you use it, and your return
is later audited, the deduction that you have taken will be disallowed (since
it violates IRS rules), potentially resulting in you having to restate your
return and pay a penalty for the resulting underpayment
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