Can I deduct indirect donations like paying expenses for a charity? What about when the charity recognizes it as revenue?

12 Thanks for the explanation! So if I understand correctly, I need to get something in writing from the charity acknowledging my payment? What if I already paid for something (like renting tables for their event) but didn't think to ask for documentation at the time? Is it too late to claim the deduction?

7 It's not too late! Contact the charity and explain the situation. Ask them to provide you with a donation acknowledgment letter that specifies the date, amount, and purpose of your payment (the table rental). Most charities are familiar with this process and should be able to provide this documentation. For any payment over $250, the IRS requires you to have written acknowledgment from the charity before filing your return. Make sure the letter states that you received no goods or services in return (or specifies the value of anything you did receive). Keep this documentation with your tax records in case of an audit.

9 How does this service handle more complex situations? I'm on the board of a small nonprofit and sometimes pay for things without going through our treasury. Would this help track those kinds of contributions properly?

5 I'm a bit skeptical. Couldn't you just ask an accountant about this rather than using some online tool? What makes this better than just talking to a tax professional directly?

18 The service is particularly helpful for complex situations involving multiple expenses or unusual donation arrangements. It analyzes your specific documentation and identifies gaps based on current IRS requirements. For board members, it can definitely help track those out-of-pocket expenses by organizing your receipts and creating proper documentation trails. What makes it different from just talking to an accountant is that it's available instantly and specializes specifically in documentation analysis. Many accountants will give general advice but won't thoroughly review all your documentation to spot potential issues. It's more like having a documentation specialist who's available 24/7 to check your paperwork before you even take it to your accountant.

21 Wait, how does this actually work? Are they somehow jumping the IRS phone queue? That seems too good to be true considering how impossible it is to reach anyone there.

13 Sounds suspicious to me. The IRS prioritizes certain types of calls and there's no legitimate way to "skip the line." I've worked with taxes for years and never heard of a service that can magically get you through faster. I'd be very cautious about any service claiming to do this.

14 It's not about skipping the line - their technology monitors the IRS phone system and calls repeatedly using an algorithm to identify the best times to get through. When they secure a spot in the queue, they call you and connect you directly to the IRS agent. No magic, just smart technology that handles the frustrating wait time for you. The service is completely legitimate and doesn't do anything that you couldn't theoretically do yourself if you had unlimited time to keep calling back and waiting on hold. They just automate that process and alert you when an agent is available. The IRS agent I spoke with provided official information that I was able to verify through other sources.

16 What about auction items? If I donate an item worth $500 to a charity auction and someone buys it for $300, who gets the tax deduction and for how much? Is it me for $500, the buyer for $300, or something else entirely?

3 For auction items, the original donor (you) can deduct the fair market value of the item ($500 in your example), provided you have documentation of the item's value and a receipt from the charity acknowledging the donation. The buyer generally cannot claim a charitable deduction for their purchase unless they paid more than fair market value. In your example, since they paid $300 for something worth $500, they received a $500 value for a $300 payment, so they don't get a deduction. If they had paid $700 for the $500 item, they could potentially deduct the $200 excess as a charitable contribution.

11 Unfortunately, donated services are not tax-deductible, even though they're valuable to the charity. I learned this the hard way as a web developer who built websites for nonprofits. You can only deduct actual expenses you incur while providing those services (like if you had to buy special software or materials specifically for the nonprofit work).

That's correct - the IRS doesn't allow deductions for donated services or time, regardless of your professional hourly rate. However, you can deduct any out-of-pocket expenses you incur while providing those services. For example, if you purchase stock photos, special fonts, or printing materials specifically for the nonprofit's projects, those costs would be deductible as charitable contributions. Just make sure to keep receipts and get acknowledgment from the charity for any expenses over $250.

This is such a helpful systematic approach! I'm embarrassed to admit I've been haphazardly handling my charity expenses - usually just stuffing receipts in a drawer and hoping I remember what they were for come tax time. Your folder system makes so much sense, especially the part about immediately requesting acknowledgment. I bet most of us volunteers lose out on legitimate deductions simply because we don't have proper documentation. Do you have a template email you use when requesting acknowledgment from charities? I'd love to streamline this process for myself.

Absolutely! I'd be happy to share my template. Here's what I typically send: "Hi [Charity Contact Name], I recently made a payment on behalf of [Charity Name] for [specific item/service] in the amount of $[amount] on [date]. The payment was made directly to [vendor name] as a charitable contribution to support your organization. Could you please provide written acknowledgment of this donation for my tax records? I need confirmation that includes: - The date and amount of the contribution ($[amount]) - A statement that I received no goods or services in exchange for this contribution - Your organization's tax-exempt status/EIN if possible Thank you for all the great work you do in our community! Best regards, [Your name]" I keep this template saved in my phone's notes app so I can quickly customize and send it right after making any charity-related purchases. Most organizations respond within a few days with the proper documentation. It's made tax season so much less stressful!

Great questions about mileage and deduction limits! For charitable mileage, you can use the standard rate (14 cents per mile for 2023) and you just need to keep a detailed log showing dates, destinations, miles driven, and charitable purpose. No special acknowledgment needed from the charity for mileage. Regarding limits - there are annual caps on charitable deductions. For 2023, you can generally deduct up to 60% of your adjusted gross income for cash donations to qualified charities, and 30% for certain types of property donations. Your animal rescue expenses would likely fall under the 60% category. If you exceed the limit in one year, you can carry forward the excess deduction for up to 5 years. Given your level of involvement, you might want to track everything carefully - those transport miles, supplies, and vet bills could really add up to significant tax savings! Just make sure to get written acknowledgment from the rescue for any single expense over $250.

Great questions! There's actually no specific IRS deadline for requesting acknowledgment letters from charities - you can ask for documentation months after making the payment. I've successfully requested acknowledgment letters up to a year after making donations, and most charities are happy to provide them since they help both parties maintain accurate records. For the dollar thresholds, here's what you need to know: - Under $250: You only need a receipt or bank record showing the payment to or for the charity - $250 and above: You must have written acknowledgment from the charity before filing your return - Over $500 (for property donations): Additional forms may be required For your small purchases under $100, keep your receipts and make sure they clearly show the charitable purpose. Even though written acknowledgment isn't required for amounts under $250, it's still good practice to get it since it makes everything cleaner if you're ever audited. One tip: consider batching your small purchases when requesting acknowledgment. You can ask the charity to acknowledge multiple small expenses in a single letter, which saves time for both of you while still meeting IRS requirements.