Question

Write a business letter to Massie Miller what is deductible and the total amount she should claim.

1. While preparing Massie Miller's 2019 Schedule A, you review the following list of possible charitable deductions provided by Massie: Cash contribution to a family whose house burned down $1,000 Time while working as a volunteer at Food Bank (5 hours @ $50/hour) 250 Cash contribution to United Methodist Church (receipt provided) 800 Cash contribution to Salvation Army (note from Massie: "I can't remember exactly the amount that I gave and I can't find the receipt. I think it was around $500.") 500 $2,550 Total What would you say to Massie regarding her listed deductions? How much of the deduction is allowed for charitable contributions?

Answer 1

To,

Massie Miller,

United States

Date: 25th February, 2020

Subject: Deduction of charitable contributions

Dear Massie,

Under IRS rules, donation to qualified charities are allowed as deduction. However, all charitable contributions should be deducted as itemized deduction in Schedule A of Form 1040.

By reviewing the list of possible charitable deductions provided by you, you can take a deduction for the cash contribution to United Merhodist Church as 'United Merhodist Church' is a qualified charitable organisation and the receipt is provided for this contribution.

Cash contribution to a family whose house burned down is not deductible because donations to a family is not qualified as charitable. Time while working as a volunteer at Food Bank is not deductible as time or services provided is not allowed as deduction. Cash contribution to a Salvation Army is not deductible as proper receipt of contribution is not available.

Total Deduction allowed for charitable contributions = $800

Thanks & Regards,

Nidhi Bathwal