Are you trying to determine whether or not a charitable donation that you’ve made – or are thinking of making – will be a tax deduction? The good news is that most donations made to charities qualify as tax deductions.
The bad, news, however, is that if you plan to write off charitable contributions, you will need to itemize your tax return.
Additionally, the IRS has set specific criteria that must be met in order for your donation to qualify as a credible tax deduction. Here is a look at those IRS guidelines for deducting charitable donations:
Charitable Donation Criteria
According to the IRS, the following criteria must be met in order for your donation to qualify as a tax deduction.
- The charitable donation must be made to a qualified organization.
- Charitable donations must be in the form of cash or goods.
- You must keep a record of what you have donated as proof of donation. This can be in the form of a bank record or a receipt that you receive from the charity to which you donated along with the date, what was donated and the amount.
- If you are donating goods, you can usually claim the fair market value of such items.
- If you purchase items or a ticket to a charitable function, you are able to only deduct the portion of the cost that exceeds fair market value.
- You will need to fill out IRS form 8283 and include it with your tax return when you donate more than $500.00 in noncash contributions any given year.
- If you claim the value of any non cash item you have donated to be worth a dollar amount greater than $5,000.00 you are required to get an appraisal of the item.
Tips to Follow When Claiming Charitable Donations On Your Tax Return
If you plan to claim charitable donations on your tax return this year, here are some great tips to help ensure you file correctly.
- If your total contributions exceeded $500.00, make sure to itemize your return and fill out IRS Form 8283.
- Never try to claim more than the fair market value of any item, as doing so can be a red flag to the IRS that may possibly lead to an audit.
- Always keep receipts for any money or goods you have donated.
- Remember to have all items valued at more than $5,000 appraised.
- While there is generally no limit to the amount you can claim for charitable donations in a given year, the total amount cannot exceed 50% of your adjusted gross income.
Are Any Items NOT Tax-Deductible?
While most donated money and goods are considered to be tax-deductible, there are some that you will need to leave off of your tax return, including:
- Money or goods donated to any for profit organizations. Again, money and goods are only tax-deductible when contributed to a qualified nonprofit group or organization.
- Money or goods given to an individual in need. While these donations are very noteworthy, they do not qualify as tax deductions.
- Money given to any political party or political campaign.
- A dollar amount based on your time contribution to a charitable organization, charitable cause, etc. For example, if you work for a soup kitchen, help out at a local food pantry or donate your time to a group like the Red Cross, although your time is always appreciated, it is not tax-deductible.