Donation
From Wikicpa
Donation is a gift to a fund or cause, typically for charitable reasons. A donation may take various forms, including cash, services, clothing, food, accommodation, or new or used items.
General
Many people often perform extraordinary or unusual challenges or feats in order to encourage people to donate to a particular cause. Such people may already receive corporate or other sponsorship, but need donations from a wider audience in order to achieve their financial goals. Some examples of "charity challenges" include celebrities having their heads shaved, crossing a continent or an ocean alone or with minimal support, or hitchhiking to Morocco.
Organised charities have sometimes been criticised for the proportion of financial donations which are used for administrative or operational purposes. Donating directly to a charity (rather than through solicitation), or donating to smaller charities, often tends to reduce expenditure on "overheads".
Sometimes people make monetary donations in memory of somebody who has passed away. When somebody passes away, the survivors sometimes request that donations be made to a specific charity in memory of the deceased person, usually related to what the person did in his/her life or how he/she passed away. This is sometimes done by people if they cannot go to the ceremonies.
In politics, the law of some countries may prohibit or restrict the extent to which politicians may accept gifts or donations of large sums of money, especially from business or special interest groups.
Usually, this money is to benefit poor people who can not afford the basic needs of life or to be spent on research to cure diseases such as cancer and AIDS.
Tax Benefits
The tax benefit for charitable contributions is only available for taxpayers who itemize deductions – about one-third of all filers. Those who take a standard deduction receive no additional tax benefit for their contributions.
In 1999, the last year for which complete data is available, about 35.5 million taxpayers made deductible charitable contributions totaling nearly $125.8 billion. Of these gifts, nearly $88.3 billion were cash donations.
Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, your 2002 deduction would be $200. You include credit card charges and payments by check in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
Those itemizing deductions reduce their taxable income by the total contributed to qualified tax-exempt organizations, with some limits. The tax saving usually equals the deduction times the marginal tax rate – the top rate for the person’s income level.
The IRS also reminds taxpayers to keep appropriate records to substantiate the value of their gifts. For example, for any single gift of $250 or more, a taxpayer must have a written acknowledgement from the charity by the earlier of the date the person files the tax return or the filing deadline, including extensions. A person donating property valued at more than $5,000 must obtain a qualified written appraisal.
