Making charitable contributions is
an easy and effective way to lower your taxes. You are eligible to take a
deduction for contributions or gifts made to certain qualified organizations.
The contributions can either be in the form of money or property. You must file
Form 1040, U.S. Individual Income Tax Return, and itemize deductions on Schedule
A, Itemized Deductions, to take advantage of this deduction.
information on charitable deductions, click one of the links below:
- Contributions in General
- Qualified Organizations
- Date of
- Item (Noncash) Donations
- Vehicle Donations
- Exchange Students
- Volunteer Activities
- Partially Deductible
- Contributions from an Individual Retirement Arrangement
Records to Keep
Contact your neighborhood Jackson Hewitt
office for more information or assistance.
Contributions in General
A charitable contribution is a donation or gift to, or for use by, a
qualified organization. It is voluntary and is made without getting, or
expecting to get, anything of equal value in return. Deductible charitable
contributions include money or property given to qualified organizations, your
out-of-pocket expenses when you serve as a volunteer for a qualified
organization, and certain expenses you pay for a student living with you who is
sponsored by a qualified organization.
Deductible charitable contributions
do not include the following, even if given to a qualified organization:
- Cost of raffle, bingo, or lottery tickets
- Dues, fees, or bills paid
to country clubs, lodges, fraternal orders, or similar organizations
- Value of your time or services
- Value of blood given
to a blood bank
You can deduct
contributions made to a qualified organization. To be considered qualified, most
organizations (other than churches) must apply to the IRS. Local fundraisers for
community members in need of assistance will not be considered qualified
organizations unless they have been approved as such by the IRS.
of some qualified charitable organizations include the following:
- Churches, synagogues, temples, mosques, and other religious
- Most nonprofit organizations, such as Salvation Army, Red
Cross, CARE, Goodwill Industries, United Way, Boys and Girls Clubs of
- Nonprofit hospitals and medical research organizations
- Nonprofit schools
- Most nonprofit, educational organizations such as
Future Business Leaders of America, 4-H Club, and Junior Achievement
- Nonprofit volunteer fire departments
- Public parks and recreation
- War veterans' groups such as Disabled American Veterans and
- Federal, state, and local governments if your contribution
is solely for public purposes, such as a gift to reduce the public debt
Some examples of non-qualified organizations:
- Political groups or candidates for public office
- Organizations whose purpose is to lobby for law changes
- Organizations run for personal profit
leagues, social clubs and sports clubs
- Labor unions
- Chambers of
- Foreign organizations except certain Canadian, Israeli, and
Date of Contribution
Usually, you may
deduct charitable contributions only in the year they were actually made. A
check that you mail is considered delivered on the date you mailed it. A
contribution charged on a credit card is deductible in the year you make the
charge. The amount of your deduction may be limited depending on the type of
property given and the type of organization to which it is given. Some
contributions that you are not able to deduct in the current year because of
adjusted gross income limits may be carried over to future years.
Extra tax deductions may be as close as your closet.
If you donated clothing, toys, furniture, or other household items to charity,
you are allowed to deduct the fair market value of your donated items. However,
no deduction is allowed for these items unless they are in at least good used
condition. The IRS does not provide a guide to determine the fair market value
suggesting, instead, taxpayers survey thrift and consignment stores for similar
items to provide an indication of the item's fair market value.
the deduction for property contributed is equal to the fair market value of the
property at the time of the contribution. Different rules may apply if the value
of the property has increased or for vehicle donations.
561, Determining the Value of Donated Property, provides general IRS
guidelines on noncash donations.
You can verify the organizations eligibility before you make a donation by going to IRS.gov and checking the Exempt
Organizations Select Check database maintained by the IRS.
If you donate a qualified
vehicle valued at more than $500, you will not be allowed to take a charitable
deduction unless you get a written acknowledgement of the contribution from the
charitable organization (usually within 30 days) and include the acknowledgement
with your tax return. The amount of your deduction is limited by the
organization's use of the vehicle. If the charitable organization sells the
donated vehicle without having significantly used the vehicle for charitable
purposes, generally your charitable deduction cannot be greater than the amount
the organization received from the sale of the vehicle. If the organization uses
the vehicle for charitable purposes, you should be able to deduct the fair
market value of the vehicle immediately preceding your donation. The
organization should issue a Form 1098-C to provide you with the required
information. For this purpose, qualified vehicles include motor vehicles, boats,
Publication 4303, A Donor's Guide to Car Donations, provides
general IRS guidelines on car donations.
have an American or foreign exchange student living in your home, you may be
able to deduct up to $50 per month as a charitable deduction on Schedule A. You
must have a written agreement from a qualified organization that administers the
student program. The student cannot be your dependent or a relative, and must be
a full-time student at the high school level or below.
Expenses that you
may be able to deduct include the cost of books, tuition, food, clothing,
transportation, medical and dental care, entertainment and other amounts you
actually spend for the well-being of the student. They do not include general
household expenses, such as rent, mortgage payments, taxes, insurance, repairs
or the fair market value of lodging.
If you are compensated or reimbursed
for any part of the costs of having a student living with you, you cannot deduct
any of your costs unless you are reimbursed for only an extraordinary or a
one-time item, such as a hospital bill. In this case, you can deduct the
expenses for which you were not reimbursed.
You cannot deduct the costs of
a foreign student living in your home under a mutual exchange program through
which your child will live with a family in a foreign country.
You can deduct the out-of-pocket expenses incurred while
serving as a volunteer for a qualified organization. This includes the cost of
uniforms not suitable for everyday use that you must wear when volunteering,
travel expenses where no significant element of personal pleasure is involved,
and vehicle expenses for which you can deduct out-of-pocket expenses, such as
the cost of gas and oil, or 14 cents per mile. The value of your time or
services cannot be deducted.
Partially Deductible Contributions
If you attended a charity benefit or event, you may be able to deduct the
dollar amount that is more than the fair market value of the event. For example,
if you attended a dinner fundraiser for a qualified non-profit organization for
$65 a ticket and the regular price of the meal is $10, your contribution amount
would be $55.
If you receive goods or services in exchange for your
contribution, you can deduct only the amount of the payment that is more than
the value of the goods or services received. For example, if you spent $20 on a
school youth group's prepared food sales and it would have cost $15 to purchase
the food items from the store, then you would be able to deduct $5.
payment is more than $75, the qualified organization must give you a written
statement that indicates the value of the goods or services received.
Direct Contributions From an IRA
If you are 70 and a half or older,
you can make a direct transfer of up to $100,000 from your IRA to any qualified
charity. These direct transfers, or Qualified Charitable Distributions (QCD),
are considered part or all of your minimum required distribution (MRD) for the
year. QCDs are not taxable and you are not allowed to claim them as charitable
deductions on your tax return. Any distributions that are not QCDs are subject
to the normal rules for IRA distributions.
Records to Keep
requires you to keep a written acknowledgement from the charitable organization
for any single cash or property contribution of $250 or more. You are also
required to keep records and receipts for all contributions regardless of the
amount or value.
For the contributions of less than $250, you should have
a canceled check, receipt from the organization, or other reliable written
documentation of the contribution. For all cash contributions, you must have
either a bank record or a receipt from the organization. For contributions of
$250 or more, written acknowledgement of the contribution from the qualified
organization is required to claim the deduction. For property with a fair market
value of more than $500, you must include a written description of the donated
property with your tax return.
For contributions of property, you should
have a receipt indicating the name of the charitable organization, date and
location of the contribution and description of the property. You should also
have written documentation that includes, in addition to the information on the
receipt, the address of the organization, the fair market value of the property
at the time of the contribution, and how the fair market value was determined.
If you have total property contributions of more than $500, you will need to
complete Form 8283, Non-cash Charitable Contributions , and attach it to your
return. If you donated property with a fair market value exceeding $5,000, you
must get a written appraisal by a qualified appraiser and include the appraisal
with your tax return.
For contributions of qualified vehicles (such as
motor vehicles, boats, and aircraft) with a claimed value of more than $500, the
charitable organization must provide you with a separate written acknowledgement
of the contribution (usually within 30 days). Form 1098-C includes the necessary
information. The acknowledgement must include the following necessary
- Your name and identification number (usually your Social
- A number that identifies the vehicle, such as the
vehicle's VIN (vehicle identification number)
If the organization sells
the donated vehicle without having made material modifications to it or without
having significantly used the vehicle for charitable purposes you will need:
certification that the vehicle was sold in an arm's-length transaction between
- The gross proceeds received by the charity from the
- A statement that the deductible amount for the donated vehicle may
not exceed the gross proceeds
If the organization keeps the donated
vehicle for its use:you will need:
- A certification stating how the charity intends to
use the donated vehicle, for how long, and whether material improvements will be
made to the vehicle
- A certification that the vehicle will not be
exchanged before the period of intended usage has ended or the intended
improvements have been made