Charitable Gift Strategies for the Oil Spill
Here's how your generosity can pay off at tax time.
Many charitable organizations are responding to the oil spill in the Gulf of Mexico. In fact, there will be a Gulf Coast Relief Telethon on CNN's Larry King Live tonight, June 21, at 8 p.m. ET. The two-hour telethon will feature three charities -- the United Way, the National Wildlife Federation and the Nature Conservancy.
There are many other groups that also are helping with relief efforts in the Gulf. If you'd like to contribute, there are several things you should consider first -- especially if you want to receive a tax benefit for your generosity.
1. Research before you give. Any time there is a big disaster, con artists try to take advantage of the situation (see my column on oil-spill scams). That's why you must check out an organization to ensure it's legitimate before making a donation. Charity Navigator has a list of high-rated charities responding to the oil spill. You can choose from a variety of environmental organizations as well as groups that provide emergency food assistance to families affected by the oil spill.
2. Know the rules for deducting your gift. You must itemize your deductions on Schedule A of your federal tax return to get a tax benefit from your charitable contribution. You’ll need receipts or bank records to back up contributions of any size (canceled checks and credit card statements count). For donations of $250 or more, you'll also need you'll need written acknowledgment from the charity containing the date and the amount of your donation. If you attend a charity auction for the oil spill and buy artwork or a vacation package, for example, you can deduct only the amount that exceeds the fair market value of the benefit you received. So you pay $500 for a weekend getaway that's worth $350, then your deductible contribution is $150.
3. Don't forget to include expenses for doing good. You can't write off the time you donate to help charitable organizations responding to the oil spill. But you can deduct expenses you incurred while helping, such as mileage (14 cents a mile), tolls, parking fees and the cost of ingredients for food you cook for a charity. For example, volunteer opportunities exist in Gulf Coast states. The American Bird Conservancy has links to opportunities in those states.
If you're thinking about donating your hair to help with the cleanup effort, your tresses from the scissors. BP and the Coast Guard are not using hair to sop up oil (see this Associated Press story.)