Question

Andrew volunteered for the American Red Cross after a recent hurricane. He traveled 200 miles and helped the victims of the disaster in the cleanup for five days. He also donated $1,500 to the American Red Cross, but charged the amount of the donation on his credit card. He plans to pay $300 plus interest each month on the credit card charge, so he will pay $900 of the $1,500 charge by the end of the year. What amounts will Andrew be able to deduct for his charitable contributions?

a) $1,500
b) $900
c) $0
d) $600

Answer 1

Andrew can deduct $1,500 for his charitable contributions on his taxes, as the IRS allows the full donation amount made within the tax year to be deducted, regardless of the payment method or payment plan for the credit card.

Step-by-step explanation:

In terms of tax deductions, the Internal Revenue Service (IRS) allows individuals to deduct the full amount of the charitable donation made within the tax year, regardless of payment method. This means that even though Andrew charged the $1,500 donation to his credit card and plans to only pay $900 by the end of the year, the full $1,500 can be claimed as a deduction, assuming he itemizes his deductions on his tax return and meets all other IRS requirements for charitable contributions.

It is important to note that regardless of the interest incurred because of the credit card charge, only the actual donated amount (the principal) qualifies for the deduction. Miles traveled for volunteering are not deductible, so the 200 miles Andrew traveled would not be considered.