General Rules for Claiming the Charitable Contribution Deduction
- The cash or property must actually be donated. A pledge or promise to donate is not deductible until you actually pay.
- The organization that received the donation must be a qualified tax-exempt organization. To qualify as a tax-exempt organization, an organization must have 501(c)(3) tax-exempt status from the IRS. Some organizations, such as churches and other religious organizations, are not required to obtain tax-exempt status from the IRS. Charities will let you know if they have received tax-exempt status.
- You must be able to itemize deductions on your tax return. People who file simple returns are not eligible to itemize their deductions.
Keep Records of Your Charitable Donations
In order to claim donations of $250 or more as deductions from income, taxpayers must keep good records and show supporting documents. The supporting documents must contain the name of the charitable organization and the date and amount of the donation.
Non-Cash Contributions of Property
Non-cash donations of goods or property are also subject to strict rules, including the following:
- You must be able to state what the fair market value of the property is. (Fair market value refers to the value that a person buying the goods or property would be willing to pay to a seller of the goods or property.)
- You must attach IRS form number 8283 to your tax return if your non-cash contribution is worth more than $500.
- You must include a written appraisal of the fair market value of that property if the property is worth more than $5,000.
- If you contribute a car, truck, boat, airplane, or other vehicle worth more than $500, you must have received a written acknowledgement from the non-profit agency before you can claim a tax deduction.
- You must keep any written acknowledgments you receive from the charity.
Are there limits on the amount of the deduction I can take for a charitable contribution?
Yes, generally, the following rules apply:
- You can deduct cash contributions in full up to 50% of your adjusted gross income.
- You can deduct property contributions in full up to 30% of your adjusted gross income.
- You can deduct contributions of appreciated capital gains assets in full up to 20% of your adjusted gross income.
Charitable contributions over these limits can be carried over to the following tax year. The excess contributions can be carried over for a maximum of five years.
What contributions are not tax deductible?
The following contributions and fees are not tax deductable:
- Contributions to political parties, political campaigns, or political action committees
- Contributions to individual people
- Fees or dues paid to professional associations
- Contributions to labor unions, chambers of commerce, or business associations
- Contributions to for-profit schools and hospitals
- Contributions to foreign governments
- Fines or penalties paid to local or state governments
- The value of your time for services rendered to a non-profit agency.
This information last reviewed 11/2/11.