The Alzheimer's Association's 501(c)(3) Status
The Alzheimer's Association is a not-for-profit organization and holds a 501(c)(3) tax-exempt status from the Internal Revenue Service (IRS). This classification is crucial, as it signifies that donations made to the organization are eligible for a charitable deduction. This applies to a range of giving methods, including cash, stock, and other non-cash assets.
What 501(c)(3) means for donors
- Tax-Exempt Status: The organization itself is exempt from federal income tax.
- Deductibility: Donations to the organization are generally tax-deductible for the donor, provided the donor itemizes their deductions and follows other IRS rules.
- Public Charity: The Alzheimer's Association is classified as a public charity, which can impact the percentage of adjusted gross income (AGI) a donor can deduct, typically up to 60% for cash gifts.
The Itemization Requirement: Standard vs. Itemized Deductions
For most individual taxpayers, receiving a tax benefit from charitable donations requires them to 'itemize' their deductions on Schedule A of their federal tax return. This means you must forgo the standard deduction in favor of listing out specific deductible expenses, including charitable contributions, mortgage interest, and state and local taxes (SALT).
It is only beneficial to itemize if the total sum of your itemized deductions exceeds the standard deduction for your filing status. The Tax Cuts and Jobs Act of 2017 significantly increased the standard deduction, meaning fewer people now find it advantageous to itemize solely for charitable giving.
How to decide between standard and itemized deductions
- Calculate the value of your itemized deductions: Total up your charitable contributions, state and local taxes, and other eligible expenses.
- Compare to the standard deduction: Check the current standard deduction amount for your filing status (e.g., single, married filing jointly, head of household).
- Choose the larger amount: Select the higher of the two values to reduce your taxable income. If your itemized deductions are less than the standard deduction, you will take the standard deduction and receive no additional tax benefit for your donation.
The Importance of Proper Documentation
Regardless of the donation type, maintaining proper records is essential for claiming a deduction. The IRS has specific substantiation requirements that vary depending on the amount and nature of your gift.
- Cash Contributions (any amount): You must maintain a record of the contribution, such as a bank statement, canceled check, or a receipt from the charity with the organization's name, date, and amount.
- Contributions of $250 or more (cash or property): The IRS requires a 'contemporaneous written acknowledgment' from the charity. This must be received by the date you file your taxes for that year and must state the amount of cash or a description of any property donated. It also needs to specify if any goods or services were provided in exchange for the gift and their estimated value.
- Non-Cash Contributions over $500: You must fill out and attach Form 8283 to your tax return.
- Non-Cash Contributions over $5,000: In addition to Form 8283, you must obtain a qualified appraisal of the donated property.
Deducting Different Types of Donations
The method and amount you can deduct depend on what you donate.
Cash Donations
Cash gifts are the most straightforward. You can deduct the full amount, up to the annual AGI limit. This includes contributions made via check, credit card, or automatic payroll deductions. Online donors receive an immediate email receipt, while check donors receive a paper acknowledgment.
Stock and Securities Donations
Donating appreciated stock can be highly tax-efficient. If you donate stock you have held for more than one year, you can typically deduct its fair market value on the date of the gift and avoid paying capital gains tax on the appreciation. The Alzheimer's Association accepts donations of publicly traded stock. For instructions, donors can visit the Alzheimer's Association's official stock donation page at https://www.alz.org/get-involved-now/other_ways_to_give/donate_stock.
Vehicle Donations
The Alzheimer's Association accepts vehicle donations, and these are also tax-deductible to the full extent of the law. The deduction amount is typically the fair market value of the vehicle, though specific rules may apply based on how the charity uses or sells the vehicle.
Non-Cash Property Donations
Donating items like household goods, art, or other property is deductible at its fair market value. However, the IRS has strict rules regarding the condition of the items and their intended use by the charity. For household items, you can only deduct a tax write-off if the item is in good condition or better.
A Comparison of Donation Types for Tax Purposes
| Feature | Cash Donation | Stock Donation | Vehicle Donation |
|---|---|---|---|
| Deduction Amount | Full cash value | Fair market value (if held >1 yr) | Fair market value (subject to sale price) |
| Capital Gains | N/A | Can avoid capital gains tax | N/A |
| AGI Limits | Up to 60% | Up to 30% | Based on fair market value |
| IRS Forms | Receipt needed for all, acknowledgment for >$250 | Form 8283 for >$500 | Form 8283, depends on sale price |
| Documentation | Bank record, receipt | Brokerage transfer records, acknowledgment | Title, acknowledgment |
