Question

While preparing Linda Lancaster's 2019 Schedule A, you review the following list of possible charitable deductions provided by Linda:

Cash contribution to a family whose house burned down $1,500 Time while working as a volunteer at Food Bank (6 hours @ $50/hour) $300 Cash contribution to United Methodist Church (receipt provided) $700 Cash contribution to Salvation Army (note from Linda, "I can't remember exactly the amount that I gave and I can't find the receipt. I think it was around $525") $525 Total $3,025 Write a response to Linda regarding each of her four listed deductions. In your response include a description of each of the four listed deductions, and why it is an allowable deduction, or why it is not an allowable deduction. Finally, list how much of the deduction is allowed for charitable contributions.

Answer 1

1. Cash contributed to family burned down cannot be considered a deduction as they are not a qualified organisation IRS rules.

2. While working as a volunteer at a Food bank cannot be deducted from the income as IRS requires you to transfer of cash or assets to be qualified as a charity.

3. $300 will be allowed deducted as United Methodist Church is exempted from state and federal tax as it is a not for profit religious organisation.

4. Even though contribution given to Salvation army can be deducted but one needs a recept for any amount of money you donate in order for the contribution to be qualified. So in this case it will not be deducted from your income.

Deductions allowed for charitable contributions

The recipient of the charity must be exempted from federal or state tax under the IRS rules. Qualified recipients include non- profit organisations, charitable entities for religious, educational and scientific purposes, cruelty prevention of animals or children and non- profit veteran entities.