TAXES > Individuals > Deductions and Credits > Itemized Deductions (Schedule A)

Schedule A - Itemized Deductions

Charitable Contributions are deductible up to 50%, 30% or 20% of his adjusted gross income, depending on the type of property contributed and the type of donee (up to 10% of taxable income for corporations). The excess can be carried forward for five years. The deduction allowed for property contributions is usually the property's fair market value, but the deduction is reduced for gifts of certain types of property. Charity must be paid within the tax year to a qualified charitable organization, and must meet certain substantiation requirements in order to be deductible. A qualifying organization is a corporation, trust, community chest, fund or foundation (including a private foundation) organized and operated exclusively for charitable, religious, educational, scientific or literary purposes, or to prevent cruelty to children or animals, or to foster and conduct national or international amateur sports competition, or a war veterans' organization, posts or auxiliaries, or a domestic fraternal society, order or association operating under the lodge system. In all cases the entity must be organized or created in the U.S. or its possessions, and none of its net earnings may inure to the benefit of any private shareholder or individual. Political contributions are not deductible, nor are contributions to a qualifying charity to the extent the donor receives goods or services. Donations to a school are deductible if no waiver of tuition or other benefit are received. Tickets to fundraising events are deductible only to the extent that the amount paid does not cover dinner, entertainment, or other recreation. Charity auctions are generally not deductible since goods are received in return for the amount paid. Payments to charities with expectation of financial return (e.g. printed advertisement) are not deductible as charity but may be deductible as business expenses.

A gift of property is a charitable contribution to the extent of the property's fair market value at the time of the gift, whether or not it has appreciated. No gain is realized on a charitable contribution of appreciated property. The deduction cannot exceed fair market value, even if its value has declined below its basis, and no capital loss may be deducted in such case.

Volunteer or other personal services performed for charity are not deductible, but a deduction is allowed for unreimbursed expenses incurred in performing services (other than political). Use of a vehicle for charitable purposes entitles the taxpayer to a deduction of 14 per mile or actual expenses for gas and oil. Parking fees and tolls are deductible in either case. Out-of-town travel for charitable purposes is limited to the amount necessarity incurred for lodging and meals, and only if there is no element of vacation or other personal pleasure.

Documentation (e.g. receipt or cancelled check) is necessary to substantiate a contribution. For donations of $250 or more a statement or other written acknowledgement from the organization is also required. Donations made by payroll deduction may be substantiated with pay stub or Form W-2.

Donations of clothing, furniture or other non-cash items exceeding $500 must be reported on Form 8283, and require written acknowledgement of the donation and its fair market value. If the donation exceeds $5,000 a certified appraisal of the merchandise is also required.

Medical expenses paid for a taxpayer, spouse, or qualified dependent are deductible to the extent they exceed 7.5% of adjusted gross income (Form 1040, line 31). These expenses include physician and hospital fees or other costs of diagnosis or prevention of disease, or for treatment of any structure or function of the body, including nursing services, health insurance premiums, prosthetics, or any device designed to correct vision, hearing or other impairment. Prescription drugs and insulin are deductible, but over-the-counter remedies, routine preventive medicines and costs of special dietary supplements are not, nor are medical or surgical procedures that are strictly cosmetic, unless the procedure is necessary to correct a deformity caused by disease or injury or a congenital abnormality. Physical therapy and mental health treatments are deductible, including rehabilitation, maintenance, and continuing out-patient treatment, as is the cost of equipment needed for the continued care of the patient or training and maintenance of specially trained animals (e.g. seeing-eye dog). Transportation costs primarily for and essential to medical care also qualify as medical expenses, including food and lodging expense while en route to the place of medical treatment, as well as taxi and other transit fares and the cost of ambulance services. Use of a vehicle for medical purposes entitles the taxpayer to deduct actual costs of gas or 10 per mile, plus parking and tolls. However, commutation to and from work by taxi due to medical disability is not deductible. Overnight lodging incurred for the proximity to a healthcare facility is limited to $50 per night.

Medical expenses are deductible only if paid within the tax year and must be reduced by insurance reimbursement. If reimbursement is received in a subsequent year, the reimbursement must be reported as income to the extent a tax benefit was received in the prior year.




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