Key Takeaways
- The IRS allows you to claim a deduction for donations you make to qualified organizations, including school district programs that are not operated for profit and are solely supported by state and local governments.
- The amount you can deduct is equal to the value of all cash and property you donate to the school district programs.
- If you donate property not commonly sold to consumers, such as a piece of art, you may need to consult an appraiser.
- You must reduce the amount of the charitable deduction by the value of any property or services you receive from the school.
Introduction
The IRS allows you to claim a deduction for the donations you make to qualified organizations. These organizations include more than just charities and will include any school district program that does not operate for profit and is solely supported by state and local governments. When you fill out your tax return this year, you can include all contributions you make to these schools as a deductible charitable contribution.
Amount of deduction
The amount you can deduct is equal to the value of all cash and property you donate to the school district programs. The federal tax law permits you to use any reasonable valuation method for most property contributions as long as it assesses a value that relates to the price a willing buyer would pay for identical property in the open market.
For example, if you donate used clothing to the school, the IRS suggests that you refer to the price a local thrift shop charges for similar clothing in comparable condition. However, if you donate property not commonly sold to consumers, such as a piece of art, you may need to consult an appraiser.
TurboTax offers an online tool called ItsDeductible Online that can help you track your donations and determine the IRS-approved values for non-cash donations.
Hiring an appraiser
In the event you need to hire an appraiser, the IRS prohibits you from increasing your charitable contribution deduction by the fee the appraiser charges you. However, for tax years prior to 2018, you can separately claim the appraiser fee as a miscellaneous deduction. Your total miscellaneous deductions for the year are only deductible to the extent it exceeds 2 percent of your adjusted gross income. Beginning in 2019 these miscellaneous expenses are no longer deductible.
TurboTax Tip:
TurboTax offers an online tool called ItsDeductible Online that can help you track your donations and determine the IRS-approved values for non-cash donations.
Reducing your deduction
Inherent in a charitable contribution is the absence of any expectation to receive something in exchange for the donation. The IRS requires you to reduce the amount of the charitable deduction by the value of any property or services you receive from the school.
However, if the school provides you with a token gift of minimal value in appreciation for the donation, reducing your deduction is not necessary. In contrast, if you donate $5,000 worth of clothes and the school provides you with a $500 gift certificate to a local spa, you must reduce your deduction to $4,500.
Annual limitations
The tax law generally limits your annual deduction to an amount equal to either 50 or 60 percent of your adjusted gross income depending on the type of charitable organization. Although, other limits can apply depending on the type of property donated and the type of qualifying charitable organization. Qualified donations in excess of the AGI limit can typically be rolled over to the following year
The IRS publishes a comprehensive list of each organization that qualifies for the various limitations. Prior to completing your tax return, you should reference the list to determine if the school qualifies you to claim a larger deduction in the current year.
For 2021, the contribution limit is suspended and you are allowed to deduct up to 100% of your AGI as an itemized deduction for qualified charitable contributions.
Claiming contribution deductions
Charitable contribution deductions are only available to taxpayers who are eligible to itemize expenses on Schedule A. To assess whether you are eligible, you must total all of your deductions eligible for itemization and compare it to the Standard Deduction amount for your filing status. If your itemized expenses exceed the Standard Deduction, you will save more in tax by itemizing.
For 2020, taxpayers who take the Standard Deduction are permitted to take a deduction of up to $300 per tax return for qualified cash contributions. In 2021, this amount is double to $600 per tax return for those filing as married filing jointly.
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