Arrghhh!!!!! I hate it when people give tax advice who should not be giving tax advice.
Case in point: I belonged to an organization that put together a silent auction. They had some very nice items, and I considered bidding on several of them. At the end of the table walk I came to a sign that said that “Your payment is tax deductable”. I almost had a fit. For those that don’t know, only the portion you pay ABOVE fair market value is actually deductable. The rest is what you paid for the object.
For example; at an auction I attended years ago, I was the winning bidder for a golf outing for 4 people. The cost to me was $30 dollars. The fair market value (greens fees at that course) was only $60 dollars. I received more value then I paid so no deduction. In this case, I failed to utilize the value of the event, but it was given (paid for) so I still get no deduction.
This is a huge misconception people have about charities. Let me make this clear, Your Girl Scout cookies are NOT tax deductions. You give them 4 bucks, they give you cookies. A purchase, not a tax deduction. If you were to give the girl a $5 bill, and tell her to keep the change for the troop, that $1 becomes a deduction. (Only if you get here to sign a receipt).
The worst offenders of this “its tax deductable” crime are those organizations who accept donated cars. You donate a car for the Medical foundation for people with a left sided lisp and they tell you it is fully deductable. They are wrong, it might not be deductible at all. First, you have to have a financial position that will allow you to take advantage of charity deductions. Second, you only get to deduct the value of the benefit of the car to the organization. So if your car is blue book $2000 but the charity sells it to a wholesaler for $500 then your deduction is only the $500. Some recent law changes now make charities disclose the value of the donation to the donor, but it can take some time to find out what your donation was worth.
This was kind of convoluted, but you all know how rants go.
By the way, look for the new Happy tax credit, it would allow deductions for Pets, yes PETS. Call your representatives and get them voting YES!!
Till next time
Dana
Dana:
Actually, it was a pretty good rant, not convoluted at all.
Happy tax isn't likely to happen this year, unfortunately.
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That was a great rant. I also love it when clients come in and tell me their neighbor/hairdresser/salesman told them they could (fill in wrong tax advice).
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