There are substantial tax benefits to making a donation to Merrick, Inc. If you itemize your deductions, you will be able to deduct the amount of your donations from your taxable income when you file your taxes in the following year. Reducing your taxable income reduces the amount of income tax you pay. To be considered eligible for a tax deduction by the Internal Revenue Service (IRS), donations must meet the following five criteria:
- The giver must make the donation to a nonprofit designated by the IRS as a 501(c)(3) corporation, like Merrick, Inc.
- The giver must intend to make the donation with no expectation of anything in return.
- The giver may designate how the donation is used but may not control when the donation is used.
- The giver's right to receive goods/services in return for the donation reduces the amount of tax deduction by the value of the goods and services received.
- Deductions for $250 or more for any one donation must be documented by a written receipt from Merrick, Inc.
Cash donations are generally 100% tax-deductible. Deductions for cash donations are limited to a total of 50% of your adjusted gross income in any one year, but unused deductions carry forward for up to five years.
Donations of stocks, bonds, and other investment securities are deductible at the fair market value of the security at time of transfer. In addition, no capital gains taxes are owed by you on the transfer of securities to Merrick, Inc. For donations of appreciated property, the maximum deduction in any one year is limited to 30% of your adjusted gross income, but again, any unused deductions can be carried forward for up to five years.
For donations of life insurance, you can claim an income tax deduction for the current cash value of the policy. Any premium payments you make after the policy is donated can also be deducted.
For life income type donations, you may be able to receive a current income tax deduction for the remainder value of the donation. Appreciated securities are excellent assets for life income donations.
For in kind contributions, you may take a deduction equal to the then fair market value of the item donated. Merrick, Inc., will provide a receipt describing the item donated. You and/or your tax preparer will have to determine an appropriate value of the item for tax purposes.
Every January, Merrick, Inc., sends out a cumulative annual giving statement for all donations received from the donor in the preceding year for aggregate donations of $200 or more. Receipts for individual donations or annual cumulative gifts less than $200 are available upon request by contacting Development & Communications Director Karen Herrera at (651) 789-6202, or by email at KarenH@MerrickInc.org
Disclaimer: Merrick, Inc., is not a tax or estate planning expert, and the information contained herein is not to be considered as tax and financial advice. Consult your own financial or tax advisor to structure any planned giving and to assess the tax impact and proper reporting of any donation for tax purposes.