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Although it’s still early in 2008, it’s never too early to think about charitable giving, so remember that you may be eligible for a tax deduction for your charitable contributions. The following are basic guidelines on how to claim tax deductions for your gifts. Be sure to consult a tax specialist for specific information about your situation. If you haven't a charity of choice -- why not consider a gift to the BMW CCA Foundation, especially to Street Survival™, the teen driving skills program? If you're interested, please visit our donations page.
There are several temporary changes for charitable contributions in tax year 2006 that were passed in relief legislation after Hurricanes Katrina and Rita. There are also new rules this year for vehicle donations - see below for details.
Charitable deductions can only be claimed on Schedule A of IRS Form 1040. Be sure to have the proper documentation for all contributions you list on the return. You may deduct your contributions to religious, charitable, scientific, educational, literary, and other institutions that are incorporated or recognized as 501(c)(3) organizations. Gifts to other kinds of nonprofits, such as 501(c)(4) organizations, cannot be deducted. To see whether your charity is eligible to receive tax-deductible contributions, please view IRS Publication 78.
For cash contributions less than $250, the canceled check, credit card or cash receipt will suffice. For contributions of $250 or more, you must obtain a "contemporaneous written acknowledgment" from the charity, either on paper or electronically (such as by email) which must contain the name of the organization, date and amount of a cash contribution or description of a non-cash contribution, and a description of benefits (if any) received in return with an estimation of their value or if none, a statement to that effect. The BMW Car Club Foundation provides such documentation for all charitable contributions.
Give a Little, Get a Lot!
While we at the BMW CCA Foundation recognize that your primary motivation to donate to our cause is altruism, but we also think you should know that great tax benefits exist for those who give. Here are some of the benefits you should know about
A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions. If the gifts are deductible, the actual cost of the donation is reduced by your tax savings. For example, if you are in the 33% tax bracket, the actual cost of a $100 donation is only $67 ($100 less the $33 tax savings). As your income tax bracket increases, the real cost of your charitable gift decreases, making contributions more attractive for those in higher brackets. The actual cost to a person in the lowest bracket, 15%, for a $100 contribution is $85. For a person in the highest bracket, 35%, the actual cost is only $65. Not only can the wealthy afford to give more, but they receive a larger reward for giving.
A contribution to a qualified charity is deductible in the year in which it is paid. Putting the check in the mail to the charity constitutes payment. A contribution made on a credit card is deductible in the year it is charged to your credit card, even if payment to the credit card company is made in a later year.
Most, but not all, charitable organizations qualify for a charitable contribution deduction.You can deduct contributions only if they are made to or for the use of a qualified recipient. No charitable contribution deduction is allowed for gifts to certain other kinds of organizations, even if those organizations are exempt from income tax. Contributions to foreign governments, foreign charities, and certain private foundations similarly are not deductible. Below, you can view a list of organizations for which your donations can be deducted. All organizations rated by Charity Navigator qualify for charitable status, and you can deduct your donations, subject to certain limitations.
An organization could lose its charity status if it devotes a substantial part of its activities to formulating propaganda or otherwise trying to influence legislation. However, an organization, other than a church, may qualify as a charity and still perform some of these activities by keeping its political expenditures to an "insubstantial" part of its activities. Furthermore, donations to needy individuals are not deductible.
There are limits to how much you can deduct, but they're very high. For most people, the limits on charitable contributions don't apply. Only if you contribute more than 20% of your adjusted gross income to charity is it necessary to be concerned about donation limits. If the contribution is made to a public charity, the deduction is limited to 50% of your contribution base. For example, if you have an adjusted gross income of $100,000, your deduction limit for that year is $50,000.
The rules on 20% limits and 30% limits are way too complicated to delve into in this space. If you are giving to organizations other than those mentioned above, first consult with your tax adviser to determine whether these other ceilings will apply. If you give an amount in excess of the applicable limitation to charity in one year, the excess is carried over for the next five years.
Rules exist for non-cash donations. If you contribute property owned for more than one year, the value of the deduction is normally equal to the property's fair market value. You have an advantage when you contribute appreciated property because you get a deduction for the full fair market value of the property. You are not taxed on any of the appreciation, so, in effect, you receive a deduction for an amount that you never reported as income.
You could clearly contribute, rather than throw out, BMW models, collector's items and equipment that you no longer use. However, bear in mind the condition of your donated goods. The IRS only permits deductions for donations of clothing and household items that are in "good condition or better."
We're not as sophisticated as Goodwill or the Salvation Army, we can certainly use computer equipment, BMW-related items for resale or books - but clothing would be better donated elsewhere. Please remember that the IRS requires a qualified appraisal to be submitted with your tax return if you donate any single clothing or household item that is not in good used condition or better, and for which you deducted more than $500.
Remember to document. No deduction is allowed for a separate contribution of $250 or more unless you have a written confirmation from the charity. A canceled check alone is not enough. If the contribution is to a religious organization solely for an intangible religious benefit (annual dues, for example) written proof is still required. All other contributions of cash require the charity to estimate the fair market value of any goods or services given to you in exchange for your contribution.
Starting in 2007, the IRS requires written documentation to substantiate deductions for all monetary donations - including cash. In case of an audit, you must have a canceled check, credit card statement or a written acknowledgement from the charity (showing the charity's name, the date of the donation and the amount given). You will no longer be able to deduct those few dollars you dropped in a charity's collection bucket without a receipt from the charity to back up your claim. Remember, it's always better to give than receive. The glory of charitable donations is that you give and receive at the same time.
The BMW CCA Foundation (CCA) is a local non-profit, 501c (3) charitable organization. Your donations are not only tax deductible but because the Foundation is almost exclusively volunteer-driven the funds go directly to maintenance of our Tire Rack Street Survival Teen Driving Program; our Automotive Library & Archive (mainly BMW related); our Preservation and Restoration Program and helps us to keep the doors to our office open and the lights turned on.
Please also consider planned giving to the BMW CCA Foundation - Planned giving is a unique philanthropic tool that allows you to ensure that the CCA's work will continue into the future and fulfill your charitable objectives, while also fulfilling your own financial objectives. Planned gifts include bequests through your will, gifts that provide income to you and others for life, gifts of life insurance, charitable lead trusts, and gifts of retirement plans. These gifts can be made in cash, stocks, bonds, personal property, life insurance and real estate.
Not able to donate cash? Here's some way's to donate to the Foundation! You don't have to be BMW aficionado to help the Foundation. You just need to have the time and desire to lend a helping hand. And it doesn't have to be a lot of time, either. In fact, whatever you do for a living, you're bound to have skills and talents that the Foundation can use.
1. Help US Online
Can you give the Foundation a "cyber-museum" advantage? This is a wonderful way for you, or teens who aren't yet old enough to become volunteers, to get involved. They can take photos and write descriptions of the unique BMWs or BMW events with staff assistance, and help keep current the museum's online list of treasures up-to-date. We need help updating the calendar, posting news and articles and expanding our site's capabilities.
2. Let's Make It Legal!
Foundations always seem to be in need of volunteers with professional legal skills. Dixie Dixon, a corporate lawyer who joined the board of the Pennsylvania SPCA, got started by reviewing copyright notices of a video about euthanasia, and she's since joined the Animal Legal Defense Fund. Please help us navigate legal issues when and if they arise.
The Board of Trustees currently has a position vacant that requires the skills of an attorney who specializes in estate planning with focus on charitable remainder trusts and planned giving.
3. Do You Have the Write Stuff?
Then help write or edit the Foundation's newsletter! It's a great way to keep supporters, donors and the public informed about what the Foundation does and what it needs. The BMW CCA Foundation relies almost entirely on volunteers to write articles, and our newsletters are produced by contracted staff. If you're not so verbally inclined, you might prefer the designing and publishing end of it, or work on creating or updating the mailing list.
4. Throw a Party!
Organize an event for all your friends, and donate the proceeds to the Foundation. Any kind of social event-a clam bake, a Super Bowl party, a jazz brunch or a Concours-is a great way to make new friends and raise money. Each year, as the word gets out, more people are bound to attend, and before you know it, your group will have a major fund-raising event.
5. Got BMW Stuff?
If you contribute property owned for more than one year, the value of the deduction is normally equal to the property's fair market value. You have an advantage when you contribute appreciated property because you get a deduction for the full fair market value of the property. You are not taxed on any of the appreciation, so, in effect, you receive a deduction for an amount that you never reported as income.
In 2007 a Friend of the Foundation donated a pristine 1995 BMW E36 M3. The kind donor received a tidy tax break, the Foundation raffled the car and the proceeds from that raffle helped defray the costs of operations. The lucky winner has an outstanding track car for the cost of a ten dollar chance. That's a win-win-win scenario!
The BMW CCA Foundation and its hallmark Street Survival Teen Safe Driving Program appreciates your support in 2007 and looks forward to exciting developments in 2008.
