Can I Get Tax Deductions for Charitable Contributions?
Donate to a qualified charity or non-profit organization and get a tax deduction. In general, you can deduct any cash contributions you make, and you can deduct the fair-market-value of any donated property, such as clothing, household items, or vehicles.
You may want to check to make sure a certain organizations is qualified to receive tax deductible donations. The IRS has an online Exempt Organizations Select Check tool, which you can use to do either of the following:
Find qualified charitable organizations
Check the tax-exempt status of any charity or non-profit
Can I Deduct My Charitable Contribution?
In order to deduct charitable contributions from your federal taxes you must itemize deductions. A donation must be made to a qualified organization 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 online software will select the correct tax form for you.
What Kind of Charitable Contributions Can I Deduct?
A deductible charitable contribution is a donation or gift made to a qualified organization. The donation must be made voluntarily and with no expectation of any substantial reward or benefit. You may generally contribute cash or property including food, clothing, household items, and vehicles. It is also possible to make charitable contributions of stocks or IRA funds.
Cash donations include money contributed by check, credit card, electronic funds transfer, or payroll deduction. You must obtain a receipt for any amount of money you donate in order for your contribution to be qualified.
Contributing 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, but if you need guidance, you may consult IRS Publication 561 - Determining the Value of Donated Property.
Car and Vehicle Donations
You may donate cars, trucks, boats or even planes. The value of your donation will be determined by how the charitable organization uses the vehicle. The organization will provide you with paperwork describing how the vehicle was used and, if it was auctioned, what the selling price was.
A non-profit organization will generally either auction a vehicle, refurbish it and donate it (or sell it to a needy buyer at a vastly reduced price), or make use of it themselves. If your car is sold at auction for over $500, you can deduct the full selling price of the vehicle on your tax return. If your car is auctioned for $500 or less, you can deduct the greater of the selling price or the fair market value. This means you will generally be able to deduct at least $500.
If a car is refurbished and/or repaired, and then given away or sold to a needy buyer, you can generally deduct the fair market value of the vehicle. If the vehicle is used by the organization for other purposes, you may also generally deduct its fair market value.
More information is available in IRS Publication 4303 - A Donor's Guide to Vehicle Donations.
What Charitable Organizations Are Qualified?
If you intend to deduct your donation, make sure you are donating to a qualified charitable organization. The following organizations generally 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 in the Internal Revenue Services' online Exempt Organizations Select Check tool (see below)
Before you make your donation, you may want to check with the organization to make sure they are qualified to receive tax deductible donations.
We suggest you use the Internal Revenue Services' online Exempt Organizations Select Check tool and either:
Search for qualified charitable organizations OR
Check the status of your favorite charity organization.
Other Qualified Charitable Organizations
Some organizations which may not be listed in the Exempt Organizations Select Check tool 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 the Exempt Organizations Select Check tool, and formally recognized Indian Tribal Governments.
2012 Donations - Make Sure the Organization Still Qualifies
You may want to double check the qualified status of smaller charitable organizations this year before you donate. In 2011, around 275,000 organizations lost their tax-exempt status because they did not file the required documents for 3 consecutive years. Donations to these organizations are no longer qualified as tax deductible. The IRS keeps an updated list of status revoked organizations.
Deduct Transportation Costs and Other Charitable Expenses
Out-of-Pocket Expenses: You may generally 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.
Transportation Expenses: You may also generally deduct the costs of transportation, including using your car to travel to and from the location where you are performing the charitable services. Learn more about travel deductions and mileage rates.
Expenses for Housing Students: You may generally deduct are any expenses incurred for housing a student sponsored by a qualified charitable organization.
Donated Professional Services: You may not deduct the value of your time or donated professional services.
What Organizations Are NOT Qualified as Charitable?
Donations to the following types of organizations are generally not tax deductible:
- For-profit institutions
- Lobbying groups
- Labor unions
- Chambers of commerce
- Civic leagues
- Sports and social clubs
- Most foreign organizations
- Homeowners’ associations
- Value of donated blood
- Political candidates or organizations
- Foreign or unrecognized governments
Restrictions on Charitable Contributions
Documentation Requirements for Qualified Donations
You should keep records of any donation you make, just in case of audit. The IRS requires you to keep a record of any cash contribution, such as a canceled check, bank statement, credit card statement, or written statement from the charity showing the date of the contribution, the amount of the contribution, and the name of the charitable organization.
If you have made donations by text message, a phone bill will serve as a record of the contribution as long as the bill states the amount, the date on which the contribution was made, and the name of the organization to which you donated.
If the value of a single donation exceeds $250, you must acquire written acknowledgment from the qualified organization. Each contribution counts as a separately itemized deduction.
If your total deduction for non-cash contributions exceeds $500, you must fill out Form 8283 Section A, which the efile.com software will do for you. If your contribution of non-cash property exceeds $5,000, you may be required to obtain a third party appraisal of the value. If that is the case, you will also have to fill out Form 8283 Section B. Remember that the efile.com tax software will generate the correct forms for you during your online tax preparation process.
Learn more about the documentation requirements for charitable contributions in Publication 1771 - Charitable Contributions: Substantiation and Disclosure Requirements.
Limits on Deductions for Charitable Contributions
If you receive some sort of compensation for your donation (such as tickets to a charity ball, a theatrical performance, a sporting event, or merchandise, goods, or services), you can only deduct the amount of the donation that exceeds the fair-market-value of what you received.
You cannot deduct the cost of raffle, bingo, or lottery tickets purchased from a charitable organization.
You cannot deduct the value of your donated time or professional services, or the value of donated blood.
If you make a pledge to donate a certain amount, you can only deduct the amount actually donated during the year.
If you make a donation by credit card or check near the end of the year, you should still include it on your tax return in the year it was made, even if you do not pay off or balance the account until after the end of the year.
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%, depending upon the type of property that you donate and the organization that you give it to. If your contributions exceed your limits, you may carry over the charitable deductions for a period of up to five years.
Learn more about charitable contributions in Publication 526 - Charitable Contributions.
Other Tax Deductible Ways to Contribute
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.
Donate IRA Funds
In 2012, taxpayers age 70 1/2 or older, who may be required to take minimum distributions from their retirement plans or face penalties, may directly contribute up to $100,000 of qualified IRA funds to qualified charitable organizations and avoid paying taxes on the amount donated.
Charitable Donations for Victims of Disasters
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.
Watch video about deducting your donations to Haiti earthquake relief.
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.
Find out about other tax deductions.