Stars Raise $42 Million

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Celebs poured out their hearts and wallets this Valentine’s Day at an auction to benefit the fight against AIDS in Africa. The (RED) charity, headed by Bono, organized the event held at Sotheby’s in New York, which raised more than $42 million Thursday evening.

Stars like Russell Simmons, Bobby Shriver, Christy Turlington, Martha Stewart, Brian Williams, Ed Burns, and Dennis Hopper bid on 82 pieces of “love” or “red” themed artwork from over 68 contemporary artists.  Damien Hirst, an artist who donated seven pieces to the auction, helped out by getting 60 of his artist friends to donate something to the event.

Proceeds from the event will be invested by the Global Fund into the United Nation Foundation to support HIV/AIDS relief programs in Africa. (RED) which has partnered with corporations like Gap, Hallmark, Apple, Emporio Armani, American Express, Converse, Microsoft, and Dell has donated over $100 million to the Global Fund in less than two years.

While the Global Fund provides more than 20% of international funding to fight AIDS, a donation of any size and to any cause can be worthwhile in more ways than one. Those who make donations to help people in need may be rewarded for their generous spirit come tax season.

Tax deductions can be taken when a charitable gift is given to an organization with a 501(c)(3) status. These include religious organizations, federal and state governments, non-profit schools and hospitals, veterans groups and public facilities.

Large donations can sometimes be a red flag to the IRS but Tom Ochsenschlager, the vice president of taxation for the American Institute of Certified Public Accountants says, “That doesn’t mean that you shouldn’t give away clothing or take the proper deductions.”  Instead, it means that the claim needs to be made the right way.  

According to Brian Davis, a certified public accountant and financial planner, there are a couple key things to know when claiming tax deductions for contributions made to qualified charities.  Be aware of what was given (cash or property) and how much it was worth.  It’s also important to be able to provide documentation.  A cash donation of $250 or less can be backed up with either a bank record or written receipt while a property donation of the same value will require a receipt with the place of donation and description of the item(s). Any charitable gift over $250 will automatically require a written receipt with the name of the organization, date and amount given.  Also, any property gifts over $5,000 will need an appraisal to go along with the receipt.

“Don’t be afraid of the IRS,” said Ochsenschlager. “Just be able to prove everything that you have claimed.”

Deductions can also be taken for any driving that is done for a charitable cause and for any out of pocket expenses paid for on behalf of a charity. Driving deductions can be made at 14 cents for every mile. But, Davis said unfortunately deductions can not be made for pro-bono work.

As rewarding as giving can be, there are some limits on what can be claimed each year.  According to Davis, there are three limits set by the IRS.  Overall deductions to qualified charities are limited to of 50% of one’s adjusted gross income (AGI). There is a subsequent limitation of 30% AGI for gifts given to ‘non-50% type charities’ which usually include veteran’s groups and not-for-profit societies.  There is also a 20% AGI limit placed on donations to private foundations.  But, the good news is, if any of the limits are exceeded, that balance can be carried on to future tax returns for five years.

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