Question

Gwen has written acknowledgments for each of the following charitable contributions during the current year:

a. Cash contributions to her church $1,250
b. Contribution of used clothes and household items in good condition to AMVETS, valued at thrift shop prices (original cost, $1,000) $200
c. Gwen's estimate of the value of her time donated to a local soup kitchen $800
d. Cash donated to homeless people asking for money for food $75

What is Gwen's charitable contribution deduction for the current year?

Answer 1

Gwen's deductible charitable contributions total $1,525, which includes $1,250 in cash to her church and $200 in goods to AMVETS. Donations of time and direct cash to individuals are not deductible.

Step-by-step explanation:

The charitable contribution deduction for Gwen's current year amounts to $1,525. This includes the cash contributions of $1,250 to her church and the value of used clothes and household items of $200 donated to AMVETS. However, Gwen's estimated value of her time ($800) and cash given directly to homeless people ($75) are not deductible as charitable contributions as per IRS guidelines.

Charitable contributions must be made to qualified organizations to be deductible. Direct donations to individuals are not deductible, and the value of personal services is also not deductible. It is important for taxpayers to understand the IRS rules on what constitutes a deductible charitable contribution to claim the correct deductions on their tax return.