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Charitable contributions, or donations, are gifts of goods or money to a qualified organization. These contributions may be deducted on your tax return if you itemize to lower your taxable income for the tax year. A charitable contribution is voluntary, and is made without getting, or expecting to get, anything of equal value in return.
What do I need to know?
You can only deduct charitable contributions if you itemize your deductions.
Gifts of goods or money must be made to qualified, tax-exempt organizations. To check an organization’s ability to receive tax deductible charitable contributions, use the IRS Tax Exempt Organization Search Tool.
It is important that you keep records of all cash or monetary gifts. These records should contain the name of the organization, the date, and the amount donated.
The amount of charitable contributions you can deduct generally can’t be more than 60% of your Adjusted Gross Income (AGI), but in some cases 20%, 30%, or 50% limits may apply. Table 1 of IRS Publication 526, Charitable Contributions, has examples of what you can and cannot deduct. You can carry over any contributions you can’t deduct for the current year because they exceed the limits based on your AGI.
In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. If the property has appreciated in value, however, some adjustments may have to be made. See Publication 561, Determining the Value of Donated Property.
Special rules apply to donations of certain types of property such as automobiles, inventory, and certain other readily valued property. For more information, refer to Publication 526.
Gifts to family and friends are not considered tax deductible. Generally, you cannot claim a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better.
For your contribution to be considered tax deductible for any tax year, it must be made by December 31 of that year.
What should I do?
Keep track of all your taxable donations and itemize them on Schedule A (Form 1040). Cash or property donations of $250 or more require a receipt from the charity. Fill out and attach Form 8283, Noncash Charitable Contributions, to your tax return if you have over $500 in donated property or goods. Do not use Form 8283 to report amounts you donated by check or credit card.
How will this affect me?
Cash or property donations of $250 or more require a receipt from the charity. Fill out Form 8283 if you have over $500 in donated property or goods.
The IRS may disallow your deduction for noncash charitable contributions if it is more than $500 and you don’t submit Form 8283 with your return.
Contributions that exceed the yearly limit might be deductible in future years.
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