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.
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 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
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.
Examples of some qualified charitable organizations include the following:
Churches, synagogues, temples, mosques, and other religious organizations
Most nonprofit organizations, such as Salvation Army, Red Cross, CARE, Goodwill Industries, United
Way, Boys and Girls Clubs of America.
Nonprofit hospitals and medical research organizations
Most nonprofit, educational organizations such as Future Farmers of America, 4-H Club, and Junior
Nonprofit volunteer fire departments
Public parks and recreation facilities
War veterans' groups such as Disabled American Veterans and Purple Heart
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
Civic leagues, social clubs and sports clubs
Chambers of commerce
Foreign organizations except certain Canadian, Israeli, and Mexican charities
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 made 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.
Item (Non-cash) Donations
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, for such noncash donations, the IRS requires they be in good condition or better to be
deductible. 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
Generally, 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
IRS Publication 561, Determining the Value of Donated Property, provides general IRS guidelines on
If you donate a qualified vehicle valueed at more than $500, you will not be allowed to take a charitable
deduction unless you get a contemporaneous 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, and aircraft.
IRS Publication 4303, A Donor's Guide to Car Donations, provides general IRS guidelines on car
If you 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 provides 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 deductout-of-pocket expenses, such as the cost of gas and oil, or14 cents
per mile. For volunteer mileage in certain federally declared disaster areas the allowable rate is higher.
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 and your ticket price was $65, your contribution amount would be $55 if the
regular price of the meal would have been $10.
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 Girl Scout cookies and it would have cost $15 to purchase the cookies from the store, then you
would be able to deduct $5.
If the payment is more than $75, the qualified organization must give you a written statement that
indicates the value of the goods or services received.
Contributions from an Individual Retirement Arrangement (IRA)
Beginning January 1, 2007, 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 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 IRAs.
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Records to Keep
The IRS 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 contemporaneous written
acknowledgement of the contribution (usually within 30 days). Form 1098-C includes the necessary
information. The acknowledgement must include the following information.
Your name and idendification number (usually your Social Security number)
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:
A certification that the vehicle was sold in an arm's-length transaction between unrelated parties
The gross proceeds received by the charity from the sale
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:
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.
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