Your Finance: Writing off charitable gifts

Long Islanders can find the nearest location by Long Islanders can find the nearest location by entering their ZIP codes on this IRS Web page: irs.treasury.gov/freetaxprep or by calling 800-906-9887. Photo Credit: iStock

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When superstorm Sandy devastated parts of the Northeast, people donated money by text and credit card, scoured their closets for items to share and drove to the most ravaged areas to aid in the cleanup efforts.

They were motivated by generosity, not tax deductions, and that is how it should be in a crisis. But a well-placed write-off does not hurt. The savvier you are about taxes, the further your philanthropic efforts will go.

The write-off for charitable gifts is one of America's biggest tax breaks -- it amounted to $158 billion on more than 37 million returns in tax year 2009, according to Internal Revenue Service data.

Here is our guide to navigating the tax aspects of charitable giving.

The basics. Charitable donations, whether money or stuff, are deductible for tax purposes. To claim the deduction, itemize deductions on Schedule A of your tax return. If you do not itemize, you cannot take the deduction.

The recipient has to be a qualified nonprofit. Donations to individual people are not deductible for tax purposes, even if you are handing a Sandy-swamped stranger a $20 bill to go find food or towels.

If you are not sure whether your charity meets the deductibility standard, you can search the IRS database of qualified groups at irs.gov/Charities-&-Non-Profits/

Exempt-Organizations-Select-Check.

Even when you give to a qualified nonprofit, you may not receive a deduction for the full amount. That is because you have to lop off the fair market value of any benefits, like tickets or merchandise, that you receive.

Personal gifts don't qualify. People asked how they can help specific areas and get tax deductions, says Ron Finkelstein, a tax partner at Marcum, in Melville. "People live on the South Shore of Long Island and they want the money to go to that area. But you cannot give money to the American Red Cross and say, 'I want the money to go to Oceanside.' "

Finkelstein tells those who want to target specific locations to look for a local nonprofit rather than a major disaster-relief group.

What your old clothes are worth. If you are donating clothes or furniture or other real property, you have to establish its fair market value so you know how much to deduct. Programs such as TurboTax's ItsDeductible or H&R Block's DeductionPro can help you figure out the right amount, especially if you are giving away a large quantity.

For donations worth more than $250, you need a written acknowledgment from the charity. (For financial donations under that amount, a credit-card statement or canceled check will suffice, while for small donations of stuff a simple receipt is enough.) Items worth more than $5,000 generally require an appraisal.

If you are giving away a car, there are special rules. If it is worth more than $500, you generally can deduct only the smaller of its fair market value or the amount the charity actually gets from its sale.

Don't forget transportation costs. Volunteers who travel for philanthropic reasons can deduct the cost of their plane, train and taxi fares, or write off their own car's mileage at 14 cents a mile.

To deduct travel expenses for charitable purposes, the trip's focus does need to be your volunteer work.

So, for example, if you work several hours each morning on an archeological dig sponsored by a charitable organization, but the rest of the day is free for sightseeing, you cannot take the deduction.

As with other charitable efforts, to take this write-off the volunteer work you do must be with a qualified organization; you cannot just wander around the storm-devastated Rockaways offering to help. And you will want to keep records about the trip and your expenses.

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