Tax breaks for organ donations
Friday, February 27, 2009
A New York man lost his bid for a $1.5 million divorce settlement. He said his ex-wife should pay him that amount in consideration of the kidney he donated to her.
The court ruled, however, that the kidney was a gift. And you thought your spouse came up with some off-the-wall presents!
Plus, said the judge, human organs may not be considered marital property.
At least the life-saving medical move was made years ago. The romantic in me would have been so bummed if they had broken up right after the surgery, making it look like the kidney was the reason for the vows.
Other organ options: It doesn't do the Long Island ex-husband much good, but organ donations can produce tax benefits in Utah.
A Utah resident who donates an organ may claim a tax credit for up to $10,000 of qualified expenses incurred for the procedure. To qualify, the taxpayer must donate bone marrow or "any part of an intestine, kidney, liver, lung or pancreas for transplantation in another individual."
The credit is nonrefundable, meaning that if it's greater than the Utah taxpayer's bill, the excess credit can't be counted. However, all is not lost. Any overage can be carried forward and used to reduce the filer's state tax bill for up to five years.
Check-off donations: The Beehive State also has a less dramatic tax code connection with organ donations. Utah taxpayers can make contributions directly on their state returns to several nonprofit groups. Among the eligible organizations is
the Kurt Oscarson Children's Organ Transplant Fund.
Utah is not alone in allowing these types of contributions. Most states offer at least a few such donation options, which will decrease your refund or increase the amount of state tax you owe.
Most of the time, you make the choice directly on your personal income tax form. In some cases, however, you must file a separate form.That's the case in Maine.
That state's Schedule CP, featured in the image to the left, offers its residents the option to give to seven nonprofit groups, as well as three political parties.
The Federation of Tax Administrators maintains a list of tax return check-off programs. Check it out to see what donation options your state allows at tax filing time.
If you do take advantage of this method of giving to an IRS-qualfied nonprofit, make an extra copy of your return showing your gift. Then be sure to count it as a charitable donation when you itemize your federal return the next year.
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