 Income tax 2021-2022. Gifts to charity, part two. Get ready to get refunds to the max. Dive in into income tax 2021-2022. Most of this information can be found on the Schedule A Instructions Tax Year 2021 on the IRS website IRS.gov, IRS.gov. We're looking at the income tax formula focused on the itemized deduction keeping them distinct in our mind from the adjustments to income or the above the line deductions, the deductions for adjusted gross income. The Schedule 1 deductions noting that the itemized deductions need to be greater than the standard deduction in order for them to be beneficial. We're looking at 12A line on the Form 1040 where we have the standard deduction or itemized deduction being taken. And we see the Schedule A, the itemized deductions, the categories listed on the left-hand side. If they total up to something greater than the standard deduction, we would pull that over to the first page of the Form 1040 line 12A, the itemized or standard deductions. These are the standard deduction amounts that you want to keep in mind to determine whether or not someone would be itemizing or not. We're continuing on with the charitable deductions here. Remember, we're looking at Schedule A related to them noting that it is possible to have some charitable contributions if someone is not itemizing. Those are on page 1 of the Form 1040 so that what you want to think about is charitable contributions traditionally and you get much bigger capacity for deductibility. If you are able to itemize, typically the thing pushing people over to itemize is owning a home where they have the mortgage interest and the property taxes pushing people over, therefore having more capacity to take the charitable contributions. However, if the standard deduction is being taken, then you could have the charitable contributions here on page 1 of the Form 1040. We're focused now on the itemized deductions, however. So now we're going to continue on amounts you can deduct, gifts from which you benefit. If you made a gift and received a benefit in return such as food, entertainment or merchandise, you can generally only deduct the amount that is more than the value of the benefit. This will happen quite often because charitable organizations have realized that if they give some token, something back in return, it increases the ability to increase the donation amount. So you might go to a charitable event. They might give you some kind of thing in return for the gift that is given. So clearly now you have an exchange taking place, but you are clearly given more money than what you are receiving, and therefore you would think that you would get the deductibility component of the increase, the amount over which the trade in value would be. So if it was a meal or something like that, however much more you put in than the cost of the meal. But this rule doesn't apply to certain members' benefits provided in return for an annual payment of $75 or less or to certain items or benefits of token value. So if it's just like a token gift, like they give you a pen or something like that, then you would think that you wouldn't have to take those into consideration. Or you think you'd get the full deduction in those cases generally. For details, so if you've got questions about it, you can take a look at publication 526 found on the IRS website example. You paid $70 to a charitable organization to attend a fundraising dinner, and the value of the dinner was $40. You can deduct then the $30, and so you're going to deduct the amount over the value of the dinner. Gifts of $250 or more, you can deduct a gift of $250 or more only if you have a contemporaneous written acknowledgement from the charitable organization showing the information in one and two next. That would be including one, the amount of any money contributed and description, but not value of any property donated. So when you give the donation, the organization should give you the evidence of that, and you would need that not to basically attach to the tax return, but in the event that the IRS came back and audited for whatever reason, and they can do that. They could basically randomly audit. It might be just like a random pick that they're basically testing out, and you would have to give them the evidence of the deduction that was taken place. If it was a cash donation, then it's quite clear because you know the amount of the donation. If it's a value donation, then it becomes more confusing because you gave some kind of property and the charitable organization isn't upon shop. They're not in the business of basically trying to value the property that was given to them. So in that instance, you're going to have to value it in some way, and they are required to give you some kind of description of what you gave to the charity. So you can give the backup or support saying, this is what I gave the charitable organization told, you know, give a secondary verification from their side that they got this thing with this description, and then we'll have to deal with the valuation of it to determine what the deductibility amount will be. Two, whether the organization did or didn't give you any goods or services in return for the contribution. So they're going to have to tell you, did you get anything in return? Hopefully if they did and it was significant, then they can help you out with the calculation in terms of the value of the thing you got in return. If you did receive any goods or services, a description and estimate of the value must be included. If you receive only intangible religious benefits, such as admission to a religious ceremony, the organization must state this, but it doesn't have to describe or value the benefits. Amounts you can deduct in figuring whether a gift is $250 or more, you don't combine separate donations. So for example, if you gave your church $25 each week for a total of $1,300, treat each $25 payment as a separate gift. If you made donations through payroll deductions, treat each deduction from each paycheck as a separate gift. You can see publication 526 if you made a separate gift of $250 or more through payroll deductions. To be contemporaneous, you must get the written acknowledgement from the charitable organization by the date you file your return or the due date. Now, just note, obviously, if you're given to like a church or something like that, then it's possible that if you're given them a check or something, they might have the written record, even if it's going to be below the threshold. But if it goes above the threshold, then that's when you're going to need the documentation in the event that there's an audit or something like that. So once again, to be contemporaneous, you must get the written acknowledgement from the charitable organization by the date you file your return or the due date, including extensions for filing your return whichever is earlier. Don't attach the contemporaneous written acknowledgement to your return. Instead, keep it for your records. So it doesn't mean you're going to take that. It's not like you need that to populate your return. You need to know what the amount was, and that might help. The documentation from the charitable organization might help you to sum up the amount that you donated, give you the description of the property, possibly the value of anything you got in return. But it's not something that you typically have to attach to the tax return. It's something that you want to keep in your records in the event that you have an audit. Remember that the statute of limitations is three years in general, and it could extend beyond that in which time the IRS can come back and ask questions about the return. So that's why you want to keep that information handy and along with the return in the event that happens. Limit on the amount you can deduct, see publication 526 to figure the amount of your deduction if any of the following applies. One, your cash contributions or contributions of ordinary income property are more than 30% of the amount on Form 1040 or 1040 SR Line 11. So now you could have some limitations. That's usually a pretty significant amount for most people. So most people aren't really deducting more than 30% of the AGI, their income in essence, on the first page of the Form 1040. But in the event that that takes place, then you might have some limitations on the deductibility and possibly some carry forward capacity to following years. Two, your gift of capital gain property are more than 20% of the amount on Form 1040 or 1040 SR Line 11, which is in essence, once again, the adjusted gross income amount. Three, you gave gifts of property that increased in value or gave gifts of property use for property.