A tax-deductible donation is a contribution of money or goods to a tax-exempt organization, such as a charity, that can reduce your taxable income. To claim a deduction for charitable donations on your taxes, you must have received nothing in return for your gift, and you must itemize on your tax return by filing Schedule A of IRS Form 1040. Generally, you can only deduct charitable contributions if you itemize deductions on Schedule A (Form 1040), Itemized Deductions. The amount you can deduct on your taxes is generally the fair market value of the property you donate, or the cash value. However, in some cases, the IRS may limit the amount you can claim on your taxes.
Here are some key points to keep in mind regarding tax-deductible donations:
- A tax-deductible donation allows you to deduct cash or property you transfer to a qualified organization, such as clothing or household items.
- Generally, you can deduct up to 60% of your adjusted gross income via charitable donations, but you may be limited to 20%, 30% or 50% depending on the type of contribution and the organization.
- Noncash Charitable Contributions applies to deduction claims totaling more than $500 for all contributed items. If a donor is claiming over $5,000 in contribution value, there is a section labeled “Donee Acknowledgement” in Section B, Part IV of Internal Revenue Service (IRS) Form 8283 that must be filled out.
If youre considering donating to your favorite charity, you can maximize your tax-deductible donation by checking whether the organization is tax-exempt by searching the IRS Tax Exempt Organization Search Tool.
