February 12, 1998 | Read Time: 1 minute
The I.R.S. has announced several changes for the 1998 tax year that adjust tax laws to reflect inflation.
One change affects the way donors calculate their deductions. Federal law allows donors to take income-tax deductions only for the portion of their contributions that are outright gifts. If donors receive any item of value in return, they must subtract the cost of such items. But donors may ignore small items they receive from charities.
The I.R.S. said a charity could tell a donor that gifts were fully deductible in these cases:
*The donor contributed $35.50 or more and received premiums that cost $7.10 or less. In 1997, those figures were $34.50 and $6.90.
*The donor received premiums that had a fair market value equal to no more than 2 per cent of the amount of the contribution, or $71, whichever was less. In 1997, the dollar figure was $69.
*The donor received appeals that contained small items — such as mailing labels — that were worth a total of no more than $7.10. The figure was $6.90 last year.
The I.R.S. also announced new threshold figures for taxpayers affected by a limit on overall deductions, including those for gifts to charity.
In 1998, taxpayers with adjusted gross incomes of $124,500 or more have to subtract from their deductions 3 per cent of the amount by which their income exceeds that amount. The income figure was $121,200 in 1997 (Revenue Procedure 97-57, Internal Revenue Bulletin 1997-52).
