Charitable Donations Deduction

Charitable Donations Deduction. What is the deduction for charitable donations?

If you itemize your deductions, you can claim a deduction for charitable donations of money, including checks, credit card charges, contributions made through payroll deductions, and out-of-pocket expenses related to volunteer work.

Do I qualify for the deduction for charitable donations?
Eligibility requirements
 – You must make the donation to a qualified organization — one organized and operated for religious, charitable, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals. Use the IRS Exempt Organizations Select Check to find information on organizations eligible to receive tax-deductible contributions (Pub. 78 data). First go to www.irs.gov and search for Exempt Organizations Select Check. Then follow the instructions to search IRS Exempt Organizations Select Check for the charity you are interested in.

If you’re in doubt as to whether an organization is a real charity, try using IRS Exempt Organizations Select Check or call the IRS at 1-800-829-1040.

 – You can deduct out-of-pocket expenses you incurred while volunteering for a charity, but only if the expenses are not reimbursed, are directly connected with the charity, and are not personal expenses. For example, you can deduct the cost of your candy-striper uniform since you cannot wear it for everyday use, but you cannot deduct the cost of hiring a babysitter so that you can volunteer.

Limitations of this deduction

 – If you get a benefit from the donation, you might not be able to deduct the full amount.

Example: If you buy a ticket to a charity dinner for $100 and the real value of the meal is only $30, you can claim a charitable contribution for $70. The amount of the donation is often printed on the ticket. However, if the benefit you receive from the charity is very minor, you can claim the full amount of the contribution. If in doubt, check with the charity.

 – You cannot deduct the value of your time.

 – You cannot deduct the cost of raffle tickets, Bingo games, or similar items, even if sponsored by a charity. But you might be able to deduct gambling losses, if you have gambling winnings during the year. Those losses would be taken as Miscellaneous, not Charitable, deductions.

 – If your child attends a school sponsored by a charity, you cannot deduct the tuition.

 – Generally you can deduct up to 50% of your adjusted gross income (AGI). Donations to certain charities and private foundations are subject to stricter AGI limitations; ask the charity or use the IRS Exempt Organizations Select Check if you want to know which limit applies.

 – If your contributions do exceed the limit, you can carry the amount you’re not able to deduct forward up to five years, so you might be able to deduct it on a future tax return.

Example: If you could deduct only $25,000 of a $40,000 donation, then you can deduct the remaining $15,000 over the next five years.

 – You must itemize your deductions in order to deduct your contributions.

Special circumstances or exceptions

 – If an exchange student who is not a relative lives with you, you can claim a charitable contribution deduction of $50 per month. See IRS Publication 526, Charitable Contributions, for further details.

What paperwork do I need for the deduction for charitable donations?
 – For any single contribution of $250 or more, you will need a written acknowledgement from the charity that shows the amount donated, whether you received any goods or services from the charity, and if so, an estimate of the value for the goods or services. You should get this acknowledgment by the time you file your return. However, you do not need to send this acknowledgement with your tax return.

Note that each contribution is counted separately.

Example: If you give $10 a week to your church for a total of $520 for the year, you do not need a written acknowledgement of your donations to take the deduction.

If you donate to a charity, get a letter or other receipt from the charity at the time you make the donation or by the end of January following the year you make the donation.

 – For out-of-pocket expenses, keep receipts to prove the expenses you paid for the charity, and obtain a written acknowledgement from the charity. This acknowledgement must list a description of the services you provided, whether any reimbursement was issued and how much, and a statement of any intangible religious benefits provided to you.

Getting acknowledgements from charities is usually easy, as they are well aware of the IRS requirements.

Deductions related to charitable donations
 – Charitable Contribution Carryover Deduction

More information about the deduction for charitable donations
For more information, see:
 – IRS Publication 526, Charitable Contributions