What Kinds of Charitable Donations Can I Deduct?
Donations to charity and non-profit organizations can count as tax deductions for taxpayers who itemize their deductions.
- The donations you make must be to qualified organizations.
- You must have documentation of your contributions.
- Deductible expenses can include cash, non-cash items like clothing and household goods, and mileage driven on behalf of a qualified charity.
What kinds of charities are qualified under IRS rules?
- Public charities, such as Goodwill, Salvation Army, Red Cross, United Way, Boys/Girls Clubs of America
- Religious organizations, such as churches, synagogues, temples and mosques
- War veterans groups
- Local, state and federal governments, if the contribution is for public purposes
- Nonprofit hospitals, schools and fire departments
- Public parks and recreation facilities
If you're not certain whether an organization qualifies, try using this IRS charity search tool, to look up organizations by name and location.
What documentation do I need for cash contributions?
The IRS says you must substantiate your cash donations with:
- Banks records, such as a cancelled check or an account statement or,
- Written acknowledgment from the charity detailing the amount and date of your contribution.
NOTE: If you make a donation of more than $250 in any one day to any one organization, your cancelled check is NOT enough. You'll need an acknowledgment letter dated prior to your filing your tax return for the year in which you made the donation.
What documentation do I need for non-cash contributions?
Donations of non-cash items totaling $500 or less require that you retain documentation that proves the value of the items.
Donations totaling more than $500 require you to fill out Form 8283 and attach it to your return. On this form you have to describe each item over $500 that you donated, identify the recipient, and provide information about the value of the item, including your cost or adjusted basis.
Or you can use ItsDeductible, a free TurboTax product that helps you track and report your donations of non-cash items, then import them onto the correct form in your tax return.
How do I value non-cash donations?
Non-cash contributions are valued at “fair-market value.” This can often be determined by comparable sales (eBay, Craigslist, etc.) or the cost to purchase a similar item at a thrift store.
Vehicle donations have their own special rules. See the next section, How do I value a donated vehicle?
When preparing your taxes with TurboTax, you can use ItsDeductible Online to help you value and track your donations. This free program gives guidance on prices for commonly donated items and is designed to transfer your donation information to your tax return.
ItsDeductible is a built-in feature on TurboTax Deluxe and above.
The IRS has a helpful booklet on this subject, Publication 561: Determining the Value of Donated Property.
How do I value a donated vehicle?
If you claim a value of more than $500 for your donated vehicle, in most cases your deduction is limited to the amount the car brings when it's sold at auction by the charity. The charity has 30 days after it sells your vehicle to issue you a Form 1098-C that shows the sale price. You must attach that form to your tax return, or the IRS will disallow the deduction.
There are some situations where you're permitted to claim the car's estimated market value:
- If the charity significantly improves the vehicle, makes significant use of it, or
- Gives the vehicle (or sells it at a discount) to a person who needs transportation.
Can I deduct the time I spend working for a charity?
No. The value of your labor is not a tax deduction.
However, you can deduct other direct costs you have from helping out with the charity such as mileage or the cost of supplies.
How do I report donations I made through payroll at work?
You report these donations the same way that you do with other cash donations.
The amount of your donation is normally included on your W-2 that you receive after the end of the year. In this case, your W-2 is your documentation for the donation.
Can I deduct charitable contributions from a prior tax year?
No, unless they are contributions carried over from a previous tax year due to income limitations.
Can I deduct donations to charities based outside of the United States?
Generally no, except that you can deduct certain donations to Canadian, Mexican, and Israeli charities if you meet requirements. Donations are deductible to:
- Mexican charities if the organization meets certain IRS tests.
- Certain Canadian charities and are limited by your income from Canadian sources.
- Certain Israeli charities, but are limited to 25% of your income from Israeli sources.
You can contact the charity for more information on whether it meets certain tests and learn more about the details from the IRS in Publication 526, Charitable Contributions.
Are there limits on how much I can claim?
Yes. Contributions are limited to 50% of your adjusted gross income (AGI), and may be limited to 30% or 20% of your AGI, depending on what you donate and the type of charity you give it to. TurboTax will guide you through this process.
If these restrictions limit your write-off in the year of the gift, the excess deduction carries over to the next year.
Also, you can't write off a portion of a contribution if you get something in return. For example, if you buy a $50 ticket to a fundraising dinner at a church, but the cost of the dinner is $20, you can only deduct $30.
There's also a special rule for folks who donate to colleges and universities and receive the right to buy tickets to school athletic events: They can deduct 80 percent of their donations.
Where do I Enter Donations in TurboTax?
- Go to the Federal Taxes tab.
- Select Deductions & Credits.
- Choose Explore on My Own.
- Select Charitable Donations.