Charitable Contributions, Federal Charitable Deduction
Can I Deduct My Charitable Contributions?
Generally, you can deduct the market value of any property you donate, as well as your cash contributions. In order to deduct charitable contributions from your federal taxes you must itemize the deductions on form 1040, Schedule A. Contributions must be made to qualified organizations in order to be considered a valid charitable deduction. During the efile.com tax preparation process all you have to do is enter your charitable contributions and the software will select the
What Kind of Charitable Contributions Can I Deduct?
A deductible charitable contribution is a donation or gift made to a qualifying organization. The donation must be made voluntarily and with no expectation of any substantial reward or benefit.
You may contribute cash or non-cash property including food, clothing, household items, and vehicles.
Donating Cash
Cash donations include money contributed by check, credit card, electronic funds transfer, or payroll deduction. You may also donate money from an IRA fund. You must obtain a receipt for any amount of money you donate in order for your contribution to qualify.
Donating Food, Clothing, and Household Items
You may deduct the fair market value of food, clothing, or household items such as furniture, linens, appliances, and electronics. Any donated household items must be new or used but in good condition.
There is no fixed method for determining the value of donated items. If you need guidance, you may consult IRS Publication 561, Determining the Value of Donated Property.
Donating Vehicles
You may donate cars, trucks, boats or even planes. The value of your donation will be determined by how the receiving organization uses the vehicle. If the value of the vehicle is over $500, the donee organization will provide you with paperwork describing how the vehicle was used and, if it was sold, what amount of proceeds were generated. You may deduct the amount of gross proceeds generated from the sale of the vehicle. If the vehicle was used for other purposes, you may deduct its fair market value.
More information is available in IRS Publication 4303, A Donor's Guide to Vehicle Donations.
What Charitable Organizations Qualify?
- Religious organizations or places of worship (synagogues, churches, mosques, temples, etc.)
- Federal, state, and local governments (including Indian Tribal Governments)
- Recreation facilities and public parks
- Nonprofit hospitals and health clinics
- Nonprofit schools and other educational organizations
- War veterans' groups
- Service organizations such as United Way, Boy Scouts, Girl Scouts, Boys and Girls Clubs of America, CARE, Red Cross, Salvation Army, etc.
- Organizations dedicated to preventing cruelty to children or animals
- Organizations established to promote literacy
- Scientific organizations
- Other organizations listed on Publication 78
Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, is a frequently updated list of most entities qualified to receive deductible charitable contributions. Because the list is so large, it is easier to use the searchable online version available here.
Unlisted Qualified Charitable Organizations
Some organizations which may not be listed in Publication 78 include smaller churches covered under large group exemptions, religious organizations and public charities with annual gross receipts of $5,000 or less, subsidiaries and affiliates of entities listed in Publication 78, and formally recognized Indian Tribal Governments.
Deducting Transportation Costs and Other Expenses
You may deduct any out-of-pocket unreimbursed expenses incurred while serving with a qualified charitable organization as a volunteer if the expenses are directly related to the services being performed.
You may also deduct the costs of transportation to and from the location where you are performing the charitable services. To learn more about travel deductions and mileage rates, please visit this page.
Also deductible are any expenses incurred for housing a student sponsored by a qualifying charitable institution.
You may not deduct the value of your time or donated professional services.
What Organizations DO NOT Qualify as Charitable?
- For-profit institutions
- Individuals
- Lobbying groups
- Labor unions
- Chambers of commerce
- Civic leagues
- Sports and social clubs
- Most foreign organizations
- Homeowners’ associations
- Tuition
- Value of donated blood
- Political candidates or organizations
- Foreign or unrecognized governments
Restrictions on Charitable Contributions
If the value of a single contribution exceeds $250, you must acquire written acknowledgment from the qualified organization. Each contribution is a separately itemized deduction.
Charitable cash contributions of any amount, even less than $250, are not deductible unless you have written communication from the charity or bank record of the contribution.
You can only deduct the amount of a charitable donation that exceeds the market price of any compensation received for your charitable gift, whether it comes in the form of admission to a charity ball, merchandise, a theatrical performance, a sporting event, goods, etc.
You cannot deduct the cost of raffle, bingo, or lottery tickets purchased from a charitable organization. Neither can you deduct the value of your time, or the value of donated blood.
If your total deduction for noncash contributions exceeds $500, you must fill out Form 8283 Section A. Generally, you will be required to obtain a third party appraisal if your contribution of noncash property exceeds $5,000. If that is the case, you will also have to fill out Form 8283 Section B.
You can only deduct up to 50% of your adjusted gross income in charitable contributions, and that figure may be as low as 20% or 30% based upon the type property that you donate and the organization that give it to.
If your contributions exceed the limits of your adjusted gross income, you may carry over the charitable deductions for a period of up to five years.
Learn more about charitable contributions: Publication 526, Charitable Contributions.
Donate Appreciated Stock and Save on Taxes
Cash and property are not the only things you can donate to charity for a tax benefit. Donations of appreciated stock can provide you with excellent tax savings. You can donate any stock that has risen in value, as long as you have owned it for over a year, and avoid any capital gains tax. If you sold the appreciated stock for cash, you would have to pay tax on the amount of appreciation. If you donate appreciated stock, you can deduct 100% of the value on your tax return.
Housing Hurricane Disaster Victims - Increase Your Standard Exemptions
Have you been kind enough to provide housing in your primary residence for victims of hurricanes or the Midwestern disasters? If you provide housing for at least 6 consecutive months, you may be able to receive a tax exemption of $500 per person, for up to four people, for a total of up to $2,000. If you qualify, you can add the appropriate amount to your standard exemptions on your 2009 tax return when you file it in 2010.
More information about housing disaster victims can be found in Form 8914, Exemption Amount for Taxpayers Housing Midwestern Displaced Individuals.
Charitable Donations for Victims of the Haiti Earthquake Disaster
The Haiti earthquake of January 12, 2010, has many people eager to help with the disaster relief efforts. Contributions to organizations which provide overseas disaster relief are tax deductible as long as the group in question is based in the U.S. and has full control over the distribution of donated funds. Before contributing, check to make sure the charitable organization is qualified, and be sure to keep a record of the donation. More information about providing charitable donations to disaster relief efforts can be found in Publication 3833, Disaster Relief.
Can I Deduct Donations to Haiti on My 2009 Tax Return?
Yes! Legislation passed in January, 2010, makes certain charitable contributions to Haiti deductible on 2009 tax returns (filed in 2010). Of course, such donations may also be deducted on 2010 tax returns (filed in 2011).
In order to qualify as 2009 tax deductions, donations to Haiti must be:
- Cash contributions (including donations by check, debit card, credit card, and text message)
- Made after January 11, 2010, and by February 28, 2010
- Made specifically for the relief of victims of the Haiti earthquake of January 12, 2010
Watch video about deducting your donations to Haiti earthquake relief.
How Do I Deduct Donations to Haiti on My 2009 Tax Return?
In order to deduct any charitable contribution, you will have to itemize your deductions on Form 1040, Schedule A. The efile.com software will fill this form out for you based on your responses during your online tax interview. Any qualified donations to Haiti (made after January 11, 2010, and before March 1, 2010) may be reported as having been made on December 31, 2009.
Remember to keep a receipt for your donation. In the case of donations by text message, a phone bill showing the contribution will suffice.
For more information about all manner of charitable contributions, including what charitable organizations are qualified and what donations are deductible, see Publication 526, Charitable Contributions.
top 