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What Should You Do Come Tax Season about Your Adopt a Family Project?

written by: •edited by: Ronda Bowen•updated: 5/11/2011

Many times over the holidays we are asked to consider donations to specific families in our communities. These adopt a family charitable donations may not be tax deductible if they are provided directly to families. There are ways to ensure that they are tax deductible within the rules of the IRS.

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    What is The Adopt a Family Charitable Donation?

    Gifts At nearly any time of the year, there are several organizations including the Salvation Army and the United Way who put out pleas to request that individuals and business owners consider working on an adopt a family program. Generally, these organizations provide specific guidelines for providing assistance to these families. Some typical requests including food, rental assistance, clothing as well as other basic items that a family may need to help them through a difficult financial time. These adopt a family charitable donations however may ultimately not be tax deductible.

    Tax deductible charitable donations are determined by the Internal Revenue Service (IRS) and clearly state when a deduction is allowed. The very first rule in determining whether or not a charitable donation is tax deductible can be found on the IRS's website and states "If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations and candidates." This is the clause that typically prevents donors from claiming adopt a family charitable donations.

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    Tax Challenges: Understanding Deductible Donations

    fruits and vegetables Because of the Internal Revenue Service rules there are specific things that one must do in order to qualify for reducing your taxes Donations such as groceries, eyeglasses or hearing aids, gifts and other direct gifts can be deducted from your taxes provided that the rules are adhered to. When you receive a plea from an organization regarding adopt a family charitable donations it is important that you make the inquiry about how to make these donations so they may be claimed on your taxes. Here are some of the options that you may be able to take advantage of:

    Donate directly to organization - if you are approached by an organization and asked to sponsor a family over the holidays, ask if they are a 501(c)3 certified organization. In most cases, if the organization is properly organized, you can make a cash donation directly to the organization which would be deductible;

    Self-employed business deductions - in some instances, those who are self-employed may be able to claim gifts up to specific amounts under marketing expenses. This of course does not allow the business to make an anonymous donation. Before you decide if this is appropriate in your specific case, contact a tax specialist to find out if this is possible as it may not be;

    Donate cash to appropriate organization - if you have been contacted by an organization that does not have a 501(c)3 certification, reach out in your community and find an alternate organization. Frequently you may find that there are organizations that are collecting gifts, food and other necessities that can provide you with a receipt for your donation.

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    Making Wise Donations

    For those who are interested in obtaining tax deductions for their charitable donations, the adopt a family may not be the best choice of methods to help those in need. Direct donations to individuals are not tax deductible unless they are made through an organization. Before you make any donations that you think may be deductible, you may want to review the IRS Publication 78 information.

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    Resources

    Sources:

    1. IRS Tax Tip 2011-57, March 22, 2011 http://www.irs.gov/newsroom/article/0,,id=106990,00.html
    2. United Way of Central Indiana, Adopt a Family http://www.uwci.org/index.asp?p=159
    3. Salvation Army Adopt a Family http://www1.usw.salvationarmy.org/usw/www_usw_cascade.nsf/ce952dea4507ee7780256cf4005d2254/e641fe1ec26712988025713f00823076?OpenDocument

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