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Overview
- New: You must have a receipt from the charity or a bank record for all money donations.
- You can't deduct the value of your time or services spent on charitable work, but you can deduct mileage or vehicle expenses if you use your car for charitable purposes.
- Your deduction for charitable contributions generally is limited to 50% of your adjusted gross income.
Keep in mind you can deduct your charitable contributions only if you itemize deductions. Plus, not every non-profit organization is a tax-qualified charitable organization. Be sure to ask the organization whether your contribution is tax-deductible, or check with the IRS.
If you do itemize and give to a qualified charity, you can deduct cash donations and donations of property, but you can't deduct the value of donated time and services.
If you contribute to a charity and receive something in return, such as dinner, then your deduction is the amount you paid or the value of the property you donated minus the value of the goods or services received. But if you don't have to reduce your deduction if you get a small item or other benefit of token value and the charity determines that the value or benefit received is not substantial and that you can deduct the entire amount you paid.
If you do itemize and give to a qualified charity, you can deduct cash donations and donations of property, but you can't deduct the value of donated time and services.
If you contribute to a charity and receive something in return, such as dinner, then your deduction is the amount you paid or the value of the property you donated minus the value of the goods or services received. But if you don't have to reduce your deduction if you get a small item or other benefit of token value and the charity determines that the value or benefit received is not substantial and that you can deduct the entire amount you paid.
- Money Contributions.
Money contributions include amounts you donate to a charity in the form of cash, check, credit card or payroll deduction.
New: You must have a receipt from the charity or a bank record for all charitable cash donations to claim a deduction on your tax return.
Out-of-pocket and car expenses you incur while donating your services are also in this category. For example, if you're a graphic designer who spent time on the church newsletter, you can't deduct your professional hourly fee. But you can deduct 14 cents per mile for the use of your car for charitable purposes. Or you can deduct your actual expenses, such as gasoline. If you donate any supplies or food during your volunteer work, you can deduct the cost of them as well. - Item Donations.
When you donate property, you generally can deduct the fair market value of the property. But you must reduce the value of the donated property (including a vehicle) by the amount of income that would be ordinary income or short-term capital gain if you sold the property. Capital gain property is the term used to describe donated property the sale of which would result in long-term capital gain if sold.
You can deduct the purchase price of new items, but the deduction amount for used goods, such as clothing, household goods, furniture or other non-cash items is based on the item's fair market value. When figuring the fair market value of used goods, check prices in stores that sell used goods, such as thrift stores. You can't claim a deduction for household items, such as furniture or clothing, unless the items are in good condition or better.
If you donate noncash items with a total value of more than $500, you must file Form 8283 with your return. You may need a qualified appraisal if you donate an item or a group of items with a value of more than $5,000.
If you donate a car, boat or plane with a claimed value of more than $500 to a charity, you can deduct the smaller of the fair market value of the vehicle or the gross proceeds of sale received by the charity from the sale of the item. However, you can generally deduct its fair market value if the organization:- makes significant use of the vehicle.
- materially improves the vehicle.
- transfers the vehicle to a needy individual whose receipt of the vehicle is directly related to the charitable purpose of the organization.
The charity will provide you with a copy of Form 1098-C, that shows information relating to your donation of the vehicle. You must attach a copy of Form 1098-C to your return.
- Donations of Time and Services.
You can't deduct the value of your time or services spent on charitable work, but you can deduct your out-of-pocket costs as explained under "Cash Donations" above.
- Limits on the Deduction. The deduction for charitable contributions generally is limited to 50% of your adjusted gross income (AGI). The deduction for appreciated property is limited to 30% of your AGI if you choose to deduct the fair market value of the property or 50% if you choose to deduct the basis of the property. The 30% limit also applies to donations of property to certain organizations, such as veterans' organizations, fraternal societies, nonprofit cemeteries, and certain private nonoperating foundations, and to donations of property for the use of an organization. A 20% limit applies to gifts of capital gain property to or for the use of an organization subject to the 30% limit. Contributions in excess of the limit can be carried forward for up to 5 years. Applying the limits properly can be complicated. See IRS Publication 526 for more information.
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Frequently Asked Questions
Question: What is the limit for charitable donations?
Answer: The deduction limit for most contributions is 50% of adjusted gross income (30% for most appreciated property). Contributions in excess of the limit can be carried over for up to 5 years.
Question: Are personal expenses incurred while doing volunteer work deductible?
Answer: In general, all of your out-of-pocket expenses for volunteer work with a qualified charity are deductible. Keep a log of your expenses and receipts for larger items. Be sure to track transportation expenses or mileage related to your volunteer work.
Question: I donated large sums of money to charitable organizations, but I don't have receipts. Can I claim these donations?
Answer: Beginning in 2007, you can't deduct a cash contribution unless you keep one of the following as a record of the contribution:
If you make a contribution by payroll deduction, you must keep a pay stub, Form W-2 or other document furnished by your employer that shows the date and amount of the contribution, and a pledge card or other document prepared by or for the qualified organization that shows the name of the organization.
For donations of $250 or more, you must get from the organization a receipt that shows the amount given, whether you received any benefit from the contribution, an estimate of the value of the benefit (if any) you received, and, if you received only an intangible religious benefit, a statement to that effect. You must get the receipt on or before the date you file your return or the due date of the return (including extensions), whichever comes first.
More Charity FAQs
Answer: The deduction limit for most contributions is 50% of adjusted gross income (30% for most appreciated property). Contributions in excess of the limit can be carried over for up to 5 years.
Question: Are personal expenses incurred while doing volunteer work deductible?
Answer: In general, all of your out-of-pocket expenses for volunteer work with a qualified charity are deductible. Keep a log of your expenses and receipts for larger items. Be sure to track transportation expenses or mileage related to your volunteer work.
Question: I donated large sums of money to charitable organizations, but I don't have receipts. Can I claim these donations?
Answer: Beginning in 2007, you can't deduct a cash contribution unless you keep one of the following as a record of the contribution:
- A bank record (such as a canceled check or a bank copy of a canceled check
- A bank statement containing the name of the charity, the date and the amount)
- A written communication from the charity that includes the name of the charity, date of the contribution and amount of the contribution.
If you make a contribution by payroll deduction, you must keep a pay stub, Form W-2 or other document furnished by your employer that shows the date and amount of the contribution, and a pledge card or other document prepared by or for the qualified organization that shows the name of the organization.
For donations of $250 or more, you must get from the organization a receipt that shows the amount given, whether you received any benefit from the contribution, an estimate of the value of the benefit (if any) you received, and, if you received only an intangible religious benefit, a statement to that effect. You must get the receipt on or before the date you file your return or the due date of the return (including extensions), whichever comes first.
More Charity FAQs
Related IRS Forms & Publications
- Form 8283 - Non-cash Charitable Contributions
- Form 8283 Instructions
- IRS Publication 526 - Charitable Contributions
- IRS Publication 561 - Determining the Value of Donated Property
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