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Charitable Donations

You can deduct donations you make to qualified charities. This can reduce your taxable income, but to claim the donations, you have to itemize your deductions. Claim your charitable donations on Form 1040, Schedule A. Your donations must go to an organization that’s one of these:

  • Nonprofit religious group
  • Nonprofit educational group
  • Nonprofit charitable group

These groups are often referred to as 501(c)(3) organizations. Donations you give directly to needy individuals don't count.

Money donations

Money donations are those you make directly to a nonprofit organization. You’ll use one of these payment methods:

  • Cash
  • Check
  • Credit card
  • Debit card
  • Payroll deduction
  • Automatic withdrawals from your bank account

If you accept something in return for your gift, you can't write off the full amount.

Ex: A local public television station offers a CD player for a $1,000 donation to its annual fund drive. If the CD player’s value is $200, your deduction is limited to $800 -- the difference between what you gave and what you got. You can claim the full charitable deduction only if you refuse the CD player.

The donor can disregard goods and services received if (for 2013) one of these applies:

  • Their fair market value (FMV) isn’t more than the lesser of:
    • 2% of the payment
    • $104
  • Both of these are true:
    • The payment is at least $52 for 2013.
    • The only benefits you receive are token items bearing the organization’s logo, like mugs and t-shirts. Their aggregate cost can’t be more than $10.40 for 2013.
  • The organization gives out free, unordered items with a donation request.
  • Both of these are true:
    • The annual payment is $75 or less.
    • The donor receives certain rights and privileges. Ex: discounted admission to performances -- but not athletic events.

You might not be sure if the organization you're donating to is IRS-approved. Just ask for the organization’s tax ID number. Then, check www.irs.gov for a list of qualified organizations.

Recordkeeping requirements

The recordkeeping requirements for donations differ depending on your:

  • Type of donation
  • Amount of donation

Cash donations less than $250  

You must prove the donation amount if you want to deduct it with one of these:

  • Receipt
  • Bank or credit union statements
  • Canceled checks
  • Credit card statements

Bank records must show:

  • Organization’s name
  • Date
  • Donation amount

Written records from the donor aren’t enough proof. These include check registers or personal notations.

For donations you made by payroll deduction, you can prove your donations if you have both of these:

  • Document showing the amount withheld, like a pay stub or W-2 from your employer
  • Pledge card or other document from the organization. It must state that they don’t provide goods or services for donations made by payroll deduction.

Cash donations of $250 or more

You can claim these if the organization gives you a written acknowledgement of the donation. It must include all of these:

  • Amount of cash contributed
  • Statement showing if the organization gave goods or services for the donation. This doesn't include token items or membership.
  • Description and good faith estimate of the value of goods and services described in the second bullet

You must receive this acknowledgement by the earlier of the:

  • Date you file your return for the year you made the donation
  • Due date, including extensions, for filing your return

Noncash donations less than $250  

The organization must give a receipt showing:

  • Organization’s name and address
  • Date and location of donation
  • Reasonably detailed description of the property donated

However, you don’t have to get a receipt if it’s impossible or impractical. (Ex: You donate property at an unattended drop-off site.) In these cases, you must keep a reliable written record for each donated item showing:

  • Organization’s name and address
  • Date and location of donation
  • Reasonably detailed description of the property donated
  • FMV of the donation at the time you donated it. It must include an explanation that tells how you calculated the FMV.
  • Cost or other basis you had in the donation if you must reduce the FMV by appreciation. The record should also show the amount of the reduction and how you figured it.
  • You might be contributing less than the entire interest in the donation. If so, you must show the amount you’re claiming as a deduction for the year as a result of the donation.
  • If the remaining interest has been donated, you must provide details of each donation of the other interests.
  • Terms and conditions attached to the donation

Noncash donations at least $250 but less than $500  

You must get and keep a written receipt or acknowledgment from the organization for these donations. You must get the receipt before or on the later of:

  • Your filing date
  • Due date of the return, including extensions

The written receipt must include:

  • Description of donation
  • Indication of goods or services you received, if any, other than certain token items or membership benefits
  • Description and good faith estimate of the value of goods or services you received. This applies unless the only benefit you received was an intangible religious benefit. (Ex: admission to a religious ceremony)

The organization can give you a separate statement for each donation. They could also give you periodic statements proving your donations.

If you'd like to learn more, see Publication 1771: Charitable Contributions at www.irs.gov.

Noncash donations more than $500 but less than $5,000  

You must have a written acknowledgement and written record, which includes:

  • How you acquired the donated property -- like purchase, gift, or inheritance
  • Approximate date you acquired donated property -- or approximate date you substantially completed donated property if it was:
    • Created
    • Produced
    • Manufactured
  • Cost or other basis and adjustments to the basis of property held less than 12 months. If available, include the cost or other basis of property held 12 months or more. This requirement doesn’t apply to publicly traded securities.

Noncash donations of $5,000 or more

You might make a noncash single charitable donation for one item or a group of similar items. If it’s more than $5,000 :

  • The organization must give you a written acknowledgement.
  • You must keep the records required under the rules for donations of more than $500 but less than $5,000 .

If you’re calculating if a deduction is more than $5,000 ($5,000), you must do so in a certain way. You need to combine all deductions for similar items you donated to all organizations in the year. You usually have to get an appraisal.

Appraisals

Sometimes you must get a written appraisal from a qualified appraiser. Appraisals are required when the value of:

  • A single donated item or a group of similar items is more than $5,000.
  • Stock not traded publicly is $10,000 or more. Publicly traded securities don't require a written appraisal.

You’re also required to get an appraisal for an item of clothing or a household item if either of these is true:

  • The item is valued at more than $500 .
  • It isn’t in good condition.

To evaluate the specific kind of donated property, the qualified appraiser must possess the needed:

  • Education
  • Credentials
  • Experience  

You’ll owe a penalty if the donated property’s value is significantly overstated. The cost of the required appraisal can't be part of your charitable donation. Instead, you can deduct it as a miscellaneous itemized expense.

If you want to learn more, see Appraisals in Publication 561: Determining the Value of Donated Property at www.irs.gov.

Appreciated property

The tax-saving potential can be much more when you donate appreciated property like:

  • Stocks
  • Real estate
  • Art
  • Antiques

However, the rules are more complicated. Your deduction depends partly on if the property you donated is considered one of these:

  • Capital-gain property
  • Ordinary-income property

To learn more, see Publication 526: Charitable Contributions at www.irs.gov.

Item donations

Donating property can earn you a deduction just as donating money can. Property donations are usually used clothing and household goods. Your write-off for these is the FMV of the property at the time you give it.

Item donations must be in good used condition to qualify for a deduction. “Good used condition” isn’t defined. You can only deduct donations the organization plans to sell or to use for its charity. If an item is heavily worn, ask the organization if it will sell or use the item.

It’s often difficult to determine the FMV of used items. The IRS doesn’t have any stated amounts considered acceptable for these items. However, the Salvation Army publishes a guide that could help you. The guide tells you the average prices of clothing, furniture, and household items in its stores. You can use this guide to establish the value of these items.

If you'd like to learn more, see Publication 561: Determining the Value of Donated Property at www.irs.gov.

When you donate a vehicle to a charity, special rules apply. If the charity sells the vehicle, the charity must send you a Form 1098-C within 30 days of the sale. This will tell you the sales price and set the amount you can deduct.

However, there’s one exception. If the claimed car’s value is $500 or less, you can deduct the value of the donated vehicle. You’ll still deduct the vehicle's FMV at the time of the donation if the charity:

  • Makes substantial improvements to the car
  • Fixes up the car and sells it
  • Gives it to a needy person
  • Uses it in its charitable efforts

If you'd like to learn more, see Publication 526: Charitable Contributions at www.irs.gov.

Out-of-pocket expenses

If you do volunteer work for a qualified organization, you can deduct:

  • Mileage expenses if you use your car while doing volunteer work for a hospital or school
  • Mileage expenses for miles you drive to and from a charity to drop off donated goods
  • Parking fees, tolls, or public transportation expenses while doing volunteer work or dropping off donated goods

The mileage rate for 2013 is 14 cents a mile.

You can also deduct the cost and care of a special uniform you have to wear while performing these services.

You can't write off the value of services or time you donate.

If you have foster children, you can deduct some of the costs of providing for them as a charitable donation. You can deduct the cost that’s more than the reimbursement you receive. You can only do this if you aren’t in the trade or business of providing foster care.

You can also earn a charitable deduction if a student lives in your home under a qualified program. To qualify for this deduction, the student:

  • Can be American or foreign
  • Must be a full-time elementary or high school student

You can deduct up to $50 a month of what you spend for the student, including the cost of:

  • Books
  • Tuition
  • Food
  • Clothing
  • Entertainment

You’ll need to count each month the student lives with you for 15 or more days to figure how many $50 allotments you can claim.

Form 8283: Noncash Charitable Contributions

You must file Form 8283: Noncash Charitable Contributions if both of these apply:

  • You claim a deduction for donated property.
  • The property has a total aggregate value of more than $500 for the year. This doesn't mean a per-item value.

The information Form 8283 requires is the same as what you need to prove a charitable gift -- what you gave, when, and to whom. For each item valued at more than $500 each, you must also specify:

  • When and how you acquired the item
  • Item’s cost or adjusted basis

Charitable deduction limits

Your deductions can't be more than 50% of your adjusted gross income (AGI) if the donations are to:

  • Public charities
  • Colleges
  • Religious organizations

Within that overall limit, gifts of appreciated property can't total more than 30% of your AGI. Appreciated property is property that’s increased in value since you got it.

Donations to certain organizations, like veterans' groups, can’t be more than either:

  • 30% of your AGI
  • 20% of your AGI on gifts of certain appreciated property

If you'd like to learn more, see Publication 526: Charitable Contributions at www.irs.gov.

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