What Types of Donations Are Tax Deductible?
If you made a charitable donation over the past year you may be wondering what you can write off on your taxes.
You may want to make a donation for the sake of the holiday season or to use it as a tax deduction (or both). Keep in mind, only if you are itemizing your deductions while filing your taxes, you can write off charitable donations to those falling within “Qualified Organizations” list.
Charitable Contribution Deduction Facts:
- You may deduct charitable contributions of money or property that you made to a qualified organization only if you itemize your deductions on Form 1040.
- Generally charitable deduction limits are up to 50% of your adjusted gross income
- Contributions must be paid in cash or other forms of property before the end of the tax year in order to be deductible when itemizing your tax deductions
- For items of property (items other than cash) donated, the fair market value of the item will be deducted on your tax return.
- When making donations, it’s best to write checks (that way you can easily track your offerings)
- The IRS Publication 526 explains Charitable Contributions and tax deductible donations.
What Organizations are considered “Qualified Organizations” to donate to?
In order to consider a charitable contribution a tax deduction when itemizing your deductions it must be made to certain types of organizations. The list of qualified organizations is as follows:
- A United States, or state possession (or political US subdivision) if made only for public purposes.
- A community chest, fund, trust, foundation or corporation that is created or organized in the US and organized and operated solely for charitable, religious, education, literary or scientific purposes. It also can be for the prevention of cruelty of animals or children.
- A church, synagogue or other religious organization.
- A war veterans organization or post, auxiliary, foundation or trust organized in the US.
- A nonprofit volunteer fire company.
- A civil defense organization that has been created under local, state or federal law.
- A fraternal society in the US, operating under lodge system if the contributions are used for charitable purposes.
- A nonprofit cemetery company if the funds are used for the care of the cemetery as a whole rather than a particular lot of crypt in the crematory.
This means your list of charitable organizations includes churches, fire departments, and much more.
Do I Need Proof of Donations when Filing My Taxes?
Yes, you need proof of donations. There are no exceptions to this. It’s a good rule of thumb to save all receipts, to write down dates, amounts and canceled check numbers. If the IRS audits you, they will want absolute proof of all donations. Non-cash donations also need proof.
For donations of money under $250, you will just need;
- The name of the church or organization,
- The date
- The amount.
- If it’s donated with a check or card, you can use bank records as proof.
If the donation was by cash, you’ll have to obtain a written record (receipt, letter ,etc) of the donation from the organization you are donating to.
What Proof Do I need For Donations above $250?
You must receive written acknowledgment from the organization or church or a receipt. The written acknowledgment must include the following information;
- The Church’s Name (Or Organization Name)
- The Amount of the Cash Contribution
- The Date of the Contribution
- A Statement which says no goods or services were given in return for the contribution.
If you are donating a non cash gift (an item) that is valued at $500 to $5000, you will need the following;
- Written acknowledgement (receipts) from the benefiting organization with their name, the amount, the date.
- Documentations of your ownership and cost
- File Form 8283
That Means I can write off what I give to my Church?
If you itemize your deductions, you may list the money you donated to a church throughout the year. The easiest way is to write checks for the donations.