December 11, 2003 | Read Time: 1 minute
The Internal Revenue Service has made inflation adjustments for 2004 to the rules that govern some charitable deductions.
Many of the adjustments apply to the federal law that governs how much of a payment to a charity can be claimed as a charitable deduction when the donor receives some item in return. Under the revised rules, a charity could tell a donor that gifts were fully deductible if:
- The donor contributed $41 or more and received premiums that cost $8.20 or less. In 2003, those figures were $40 and $8.
- The donor received premiums that had a fair market value equal to no more than 2 percent of the amount of the contribution, or $82, whichever was less. In 2003, the dollar figure was $80.
- The donor received appeals that contained small items — such as mailing labels — that were worth a total of no more than $8.20. The figure was $8 last year.
The IRS also announced new threshold figures for taxpayers who are affected by a limit on overall deductions, including those for gifts to charity. In 2004, taxpayers with adjusted gross incomes of $142,700 or more will have to subtract from their deductions 3 percent of the amount by which their income exceeds that figure. The income figure was $139,500 in 2003.
The adjustments are published in Revenue Procedure 2003-85, which will appear in the Internal Revenue Bulletin 2003-49. It is available online at http://www.irs.gov/pub/irs-drop/rp-03-85.pdf.
