You have probably heard about Charitybuzz– the online site where you can bid on various items or even experiences. Most of the earnings earned from the sale of such items go to charitable causes. 

 

The online platform has already partnered with celebs and non-profits so that they can achieve their goal of auctioning a wide variety of items, VIP experiences, and more. 

However, if you buy an item on Charitybuzz, will it be taxed? 

 

Well, let us find out in the subsequent sections.

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Understanding Charitybuzz’s Business Model

Here is what you need to know about this business model that seeks to offer support to charitable causes but still let you enjoy luxury vacations or items: 

 

How Charitybuzz Works

Simply put, the site connects nonprofits with donors who would like to donate but still enjoy high quality items or VIP experiences. In most cases, the site allows you to get some experiences that are not usually open to the public. 

 

Some of the experiences you can get through Charitybuzz include luxury vacations or a lunch date with a celeb. Usually,the site will take a small percentage of the money earned and donate the remaining to the nonprofits. 

 

To use the service, you can just create your account, place bids on items or experiences you would like to enjoy and then wait for the bid to close so you can know the outcome. 

 

Types of Items/Experiences Sold

Once you join the platform, you will have access to a wide variety of items or experiences you can bid on. Some of these items or experiences are: 

 

• You can bid on luxury goods such as designer clothing or high quality jewelry.
• You can have lunch or dinner with celebs.
• You can attend meet-and-greet occasions especially for sports personalities.
• You can also gain access to private events. 
• You may also get travel packages to exotic destinations. 
• You can also get access to VIP experiences like sports or concerts.

 

Tax Deduction Basics

Learn the basics of tax deduction on Charitybuzz. 

 

General Charitable Contribution Rules

General rules on Charitybuzz: 

 

• If you would like to claim a charitable deduction, you should do the following: 
• You should contribute to a nonprofit that is tax-exempt.
• You must also itemize the deductions using Schedule A. 
• Any item you buy from the site, the deduction will only be imposed on the amount exceeding the market value of the said asset.

 

Premium Payments Principle

As per the premium payments principle, if you buy an item via this site, only the amount exceeding its fair market value is deductible. 

 

Charitybuzz-Specific Considerations

It’s only the amount that is above the market value of the experience or item is tax deductible. If the value is not filled out on the site, you should research. This aspect is important because it will have an impact on the amount that will be tax deductible. 

Documentation Requirements

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If the tax deductions is over $250, the IRS demands that you have a written statement showing the value, description of the item, and deductible amount that is above the value. You should also keep the records of your conversations with the site or the nonprofits. 

 

Common Scenarios

These scenarios may apply to Charitybuzz purchases: 

 

Fully Non-Deductible

If the item has the same value as the market value or is a personal purchase, it will be non-deductible. Also, this will apply if the item has a lower value than the fair market value.

 

Partially Deductible

It is usually partially deductible if the purchase exceeds the current market value, only the amount above it will be deductible. As such, the item is therefore considered a partially deductible purchase. 

 

Best Practices

These are the tips you can apply in Charitybuzz purchases: 

1. You should check the value of the item you would like to bid on before you do it so that you know if it will be deductible.
2. You must keep records such as the receipts of the items and any other document showing communication between you and Charitybuzz or the charity organization. 
3. You can talk to tax experts so they can help you handle your tax deductions. 

 

All of these practices are applicable to the purchases you make on Charitybuzz. 

 

Conclusion

While you place your bids on Charitybuzz, you should be aware of the amount that will be tax deductible. If the value of the experience or luxury item is above the fair market value, it will be tax deductible. If you don’t seem to understand the various aspects, you can talk to a tax professional and you will be assisted.