Video: Deducting Charitable Contributions
Question: I donated both cash and used clothing to charity this year. Can I deduct these contributions on my tax return?
Narrator: I’m Tiffany Smith from TurboTax. Your charitable giving is surely much appreciated. More good news is that you can deduct most or all of what you donated. Just be sure to follow the IRS’s hard-and-fast rules.
To reap tax benefits for making charitable donations, you must itemize your deductions rather than taking the standard deduction.
Donations of both cash and property are deductible. For cash, you need written evidence: either a confirmation from the charity or a bank record, canceled check or credit-card statement.
You may be surprised at how quickly your donations of used clothing and other household items such as baby furniture or toys can add up. The items must be in at least “good used condition,” and you can deduct only the amount they would sell for in a thrift shop. To help you keep track of this information, TurboTax has a tool called “ItsDeductible" that uses eBay to calculate the IRS-approved value of your donations.
You can also donate financial assets such as stocks and bonds to charity. If you’ve owned those assets for more than a year you get a double benefit: You can deduct the asset’s value on the day of the donation. And neither you nor the charity will have to pay capital gains taxes on any increase in value.
The value of your gift affects the documentation you’ll need. For cash and property contributions of $250 or more, keep written proof from the charity showing the date and value of your donation. If you make a non-cash gift worth more than $500, TurboTax will help your fill out Form 8283. And if you donate property, jewelry, furniture or other treasures valued at more than $5,000, get an independent appraisal—the IRS requires it.
And remember, only contributions to certain organizations are tax deductible. For more information, go to the IRS web site or to IRS Publication 78.
If you use TurboTax, we’ll help you identify which contributions are tax deductible and fill in all the right forms for you. Try it for free at TurboTax.com.