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Anne Powelson Anne Powelson
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Charitable gifts - true or false

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As Thanksgiving and the winter holidays approach, many set aside a little extra for their favorite charity. So it seemed appropriate to have this month's true or false questions be about charitable giving.

- Rose is 72 and has a traditional IRA. She is required to make a withdrawal (required minimum distribution or RMD) from her IRA each year. In 2011, she can have her RMD sent directly to a charity, and if she does so, it will not be included in her taxable income.

True. In 2011, those over age 70 may transfer up to $100,000 from an IRA directly to a charity. Eligible transfers count against the RMD and are not included in income. This provision has not yet been extended to 2012. 

- Everyone benefits from tracking charitable expenses.

False. Only those who itemize will benefit from tracking their charitable expenses.

- Naomi saves her returnable cans and donates them to the Cub Scouts. She can deduct the value of her donation on her taxes.

True. She may deduct the cans as a non-cash contribution. For her records, she should document the number and condition with a photo. And if she doesn't leave the cans at an unmanned collection point, she should also obtain a receipt for her contribution. Without receipts, her total non-cash contributions are limited to $250.

- While driving to return his cans on a particularly cold morning, David notices a homeless man rummaging in a trashcan. David gives the man his cans to return and gets a receipt from the homeless man. David can deduct the value of the cans on his return.

False. Though what David did was very kind, charitable contributions made to individuals are not deductible.

- Every year at Christmas, Hugo's mother sends him clothing that he would never consider wearing. If Hugo donates the clothes to a charitable organization, he doesn't get any deduction, because he didn't pay anything for the clothes.

False. Hugo may deduct the lower of his basis in the clothes, or the fair market value. Since his mother gifted Hugo with the clothing, Hugo's basis is what his mother paid.

- When Allen buys a 'balloon' or similar cut-out to support a charity, he saves the register receipt documenting the purchase, because all cash donations require documentation.

True. All cash donations require documentation. Documentation may be a receipt or a cancelled check. For cash donations over $250 dollars, a letter from the organization is required stating the amount donated and any goods or services received in exchange.

- Donna is a licensed beautician who donates haircuts and styling at a local shelter. She can deduct the value of her services.

False. While she is able to deduct her charitable miles and the supplies she uses, she cannot deduct for her time and effort.

Whether you donate time or money or donuts, and whether it helps you on your taxes or not, donors deserve a round of thanks for helping to make Maine a better place!


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