Benefits of Giving

State of Alabama Income Tax Credit

The Alabama 4-H Club Foundation is the only 4-H organization in Alabama that can offer taxpayers the benefit of the state income tax credit for their gift to support 4-H youth programs. This state income tax credit is available to Alabama taxpayers who contribute to institutions of higher education (including fundraising agencies that fall within their control), to public libraries and to public broadcasting stations located in Alabama.

This credit is in additional to any federal income tax benefits for which the donor may be eligible. The credit that a donor may claim is up to 50 percent of the amount of gifts to eligible organizations during the tax year. The credit may not exceed $100 per individual or $200 for a married couple filing a joint return or 20 percent of his or her tax.

Internal Revenue Service Tax Deductions

If you itemize

You can deduct charitable contributions of cash, property and certain out-of-pocket expenses when the recipient is qualified by the IRS to receive tax-deductible gifts. More specifically:

  • In a given year, charitable gifts of cash up to a maximum of 50 percent of the donor’s adjusted gross income may be deducted.
  • Gifts of “capital gain property” (assets such as stocks or real estate that have increased in value) that you have owned at least one year and a day are deductible at full current value subject to a limit of 30 percent of adjusted gross income.
  • Any charitable deduction that exceeds these stated limits for a given year may be carried forward to the following year. The deduction for a very large gift may be carried forward and deducted in as many as five additional years.
  • Actual out-of-pocket expenses that result from volunteer work may be deductible. The IRS allows a deduction of $.15 per mile or the actual cost of gas and oil. Parking fees, tolls, and meals paid for, while on out-of-town volunteer work, may be added to the deduction amount if you were not reimbursed.

If you don’t itemize

When you do not have enough deductions to itemize, your charitable gifts have, in effect, been included in the standard deduction. You might consider timing your gifts to group as many deductions as possible into alternate tax years and thereby maximize tax savings.

What’s not deductible?

Contributions that are not deductible for tax purposes include:

  • Political contributions or contributions for lobbying purposes.
  • Dues and fees paid to country clubs, fraternal orders, or similar groups.
  • The value of any “substantial benefit” received from a contribution to a charitable organization. You may deduct only the amount that exceeds the value of the benefit. For example, the value of a premium you received for making a gift.
  • Expenses for travel that include a significant element of personal pleasure, such as recreational outings or vacation-like travel.
  • The value of any personal services you provide. The cost of material or other expenses may be deducted.
  • Future interests in personal property.
  • Charitable gifts designated for individuals or foreign organizations.
  • The cost of raffle or lottery tickets or property purchased at an auction. If you pay an amount for a charitable auction that exceeds the value of the item, the excess you paid may be deduction.

Acknowledgment of Your Gift

  • It is important that documentation and receipts of all charitable gifts be kept with your tax records.
  • When you give property other than cash, record the organization’s name and address and a description of the property given.
  • For contributions over $75 for which a tangible benefit was received, you should be notified of the value of your benefit and note that only the excess of that value is deductible.
  • For gifts of $250 or more, you must have a written acknowledgment from the charity stating whether or not any tangible benefit was received in exchange for the gift. This should also include an estimated value of the benefit or premium.
  • When you claim a deduction that exceeds $500 for gifts of property, you will need to complete Section A of IRS Form 8283, “Noncash Charitable Contributions,” and attach it to your tax return.
  • If the total deduction you claim is over $5,000, you may also need to obtain a “qualified appraisal” of the value of the donated property and complete Section B of Form 8283.
  • Again, it’s important to consult with your tax adviser or the IRS for details on the tax benefits of any gift you make.

The Alabama 4-H Club Foundation, Inc., is a 501(c)(3) organization. All donations made to the Alabama 4-H Club Foundation are tax-deductible according to IRS Standards. The Alabama Cooperative Extension System (Alabama A&M University and Auburn University) is an equal opportunity educator, employer, and provider. If you need a reasonable accommodation or language access services, contact the Alabama Cooperative Extension System HR at (334) 844-1326. © 2024 by the Alabama Cooperative Extension System. All rights reserved.