Giving back is the right thing to do. And sure, there's also the benefit of getting a tax deduction. Of course, that’s not why you donate, but when you make a tax deductible donation, your taxable income is lowered, which means you’ll have less tax to pay.
Whether you're thinking of donating cash to the Salvation Army or clothing to a local non-profit, here's what you need to know about charitable tax deductions.
What's Deductible And What's Not?
Tax Deductible Donations
Your donations must go to qualified tax-exempt nonprofit groups that are:
- Have a literary purpose
- Prevent cruelty to children or animals
Not Deductible as Charitable Donations
- Amounts paid to civic leagues, social and sports clubs, labor unions, and chambers of commerce
- Gifts made to most foreign organizations
- Gifts made to groups that are run for personal profit
- Gifts made to groups whose purpose is to lobby for law changes
- Amounts paid in homeowner's association dues
- Gifts made to individuals
- Donations given to political groups or candidates running for public office
- Money paid for a raffle, bingo, or lottery ticket
- Amounts paid for tuition
- The value of blood donated to blood banks
What Is My Donation Worth?
Aside from the warm and fuzzy feeling that comes from making a difference in the lives of others ⎼ what is a charitable donation worth on a tax return? In order to claim a charitable deduction on your return, you must itemize your deductions on Form 1040, Schedule A.
Other key points:
- A contribution to a qualified charity is deductible only in the year it is paid.
- For cash contributions under $250, you need either a receipt or bank record, such as a cancelled check or credit card statement.
- If a contribution is made with a credit card, it is deductible when it is charged, not when you pay the bill.
- The IRS only permits donations of clothing and household items that are in “good condition” or better. Special rules apply to vehicle donations.
- No deduction is allowed for a separate contribution of $250 or more — unless you have written acknowledgment from the charity showing the date and amount of the contribution and verifying that you did not receive any goods or services.
- Make sure you receive and save the proper substantiation for every donation. If you are in the 25% bracket, that $1,000 written acknowledgment could be worth up to $250 in savings.
What If I Have Deductible Gifts To Claim?
The experts at H&R Block can look at your personal situation and help you determine what charitable contributions you can claim when you file. And if you’d rather file your taxes yourself, know you are still backed by our 100% accuracy and maximum refund guarantees. In an office or online, don’t just get your taxes done. Get your taxes won with H&R Block.