Charitable Contribution Deductions

Giving to charity can have a lot of benefits. It helps others in need, can make you feel good, and can help you get a tax deduction. There’s all around positives to donating to charity, especially if you follow a few tips that can help you deduct the gift from your tax return. Here are eight things you need to know:

  1. The charity must be qualify in order to claim a deduction. Gifts given to political organizations, candidates or individuals aren’t deductible.
  2. You have to file a Form 1040, and itemize all deductions. Add Schedule A, Itemized Deductions to your federal tax return filing.
  3. You’re only able to deduct the amount of the gift that’s more than any benefit received in conjunction with the donation. Benefits on contributions, such as entertainment tickets, services, meals, or merchandise, limit the amount you can deduct.
  4. Donating property results in the use of the item’s fair market value to determine the appropriate deduction. Fair market value is usually considered by the amount you’d receive if you sold the property as opposed to donating it.
  5. Household item and clothing that is used is required to meet certain requirement on the condition. Previously, you were able to deduct any donation, however, current rules state that all used items must be in good condition. Vehicle donations have special rules all their own.
  6. If you’ve given property that totals more than $500 for one tax year, and is not cash, you’ll have to file Form 8283, Noncash Charitable Contributions.
  7. Records are required, as you’ll have to prove the amount of contributions you’ve claimed. Depending on the type of donation you’ve made, the record requirements vary. If you donate cash, you must have a written record, regardless of the amount of the donation, if you want to deduct the gift. This written record can be anything from a cancelled check to a letter from the organization. However, it should clearly state the name of the charity, how much was donated, and when. Text donations can consider a cell phone bill as a written record, provided it shows the appropriate information.
  8. If the donation totals more than $250, you should request a written statement from the organization that details the amount of the donation, as well as a description of the property. You’re also required to state whether any benefits were received from the organization.