Tax Guide, Deductions
- Charitable Donations

For detailed information, please refer to IRS Publication 526.

Qualified Charities

You can deduct your charitable contributions only if you make them to a qualified organization. Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization.  Qualified organizations are essentially charities, non-profit organizations and religious organizations that are organized or created in the United States or its possessions, or under the laws of the United States, any State, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals.

To see if an organization is qualified, go to IRS Tax Exempt Organization Search.

Most contributions to foreign charities are not deductible.  There are limited treaty exceptions for Canadian, Mexican, and Israeli charities. In general, deductions are allowed only to the extent of income sourced in that treaty country and only if the foreign charity would qualify as a U.S. charity if organized under U.S. law.

Examples of Deductible Donations:

• Donations by cash, check or credit card to qualified charitable organizations. 
  A church, synagogue, or other religious organization; a war veterans' organization; numerous other qualified charities like American Red Cross, United Way, Feeding America, World Vision, American Cancer Society, Nature Conservancy, Doctors Without Borders, etc.
  
  Only donations made to GoFundMe charity campaigns are tax-deductible and will receive tax receipts from PayPal Giving Fund.  Donations to GoFundMe personal campaigns are generally considered to be personal gifts and are generally not deductible.
  
  Donation of Clothing and Household Items
  Must be in good used condition or better.  Value is the fair market value at the time of the contribution (not the original cost).  For your records, you should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence.  Qualified organizations include churches and thrift shops such as Salvation Army, Goodwill, Habitat for Humanity, etc.
   

• Contributions of Property.  
  If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution.

• Expenses Paid for Student Living With You. 
  In certain situations, you may be able to deduct expenses related to a student (12th grade or lower) who lives in your home under written agreement between you and a qualified organization as part of a program of the organization to provide educational opportunities for the student.
   

• Out-of-Pocket Expenses in Giving Services
  Although you can't deduct the value of your time and services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization.

Examples of qualified deductions:

1.  Expenses you had only because of the services you gave.  For example, the out-of-pocket cost of your uniform if you volunteer for the Red Cross at a hospital.

2.  Unreimbursed travel expenses necessarily incurred while you are away from home performing services for a charitable organization.  See https://www.irs.gov/newsroom/irs-offers-tips-on-charity-travel

3.  Mileage for charitable purposes (14 cents per mile, plus parking fees and tolls) when you use your vehicle to perform services for, or deliver donated items to, a qualified charitable organization.

4.  The reasonable out-of-pocket expenses you pay to allow under-privileged youth (selected by a qualified charity with goal to reduce juvenile delinquency) to attend athletic events, movies, dinner.  Your own expenses are not deductible.

5.  If a qualified organization selects you to attend a convention as its representative, you can deduct unreimbursed meal and lodging expenses. 

6.  Expenses related to being a foster parent if a qualified organization selected the individual and you don't make a profit.

• Donation of Car or Boat
  If your car is valued at more than $500, the charity that receives your donation is required to send you Form 1098-C reporting the gross sale amount of your donated car.  This tax form is required to be attached to the tax return.
   

Giving Property That Has Decreased in Value

If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value.

Giving Property That Has Increased in Value

If you donate property that has increased in value, your deduction is generally the fair market value if it is long‑term capital gain property donated to a public charity. However, for certain types of property (such as short‑term gain property, ordinary income property, or property unrelated to the charity's exempt purpose), your deduction may be limited to your basis.

Always ask for and save receipts when giving to charity!

Cash Charity:

All cash contributions require a bank record or written acknowledgment. For any single contribution of $250 or more, you must have a contemporaneous written acknowledgment from the charity — meaning you receive it no later than the date you file your tax return (including extensions).

A valid acknowledgment must include:

• The amount of cash you gave, or for non‑cash gifts, a description of the property

• A statement saying whether you received any goods or services in return

• If you did receive something, the charity must provide a good‑faith estimate of its value

• If you received only intangible religious benefits, the acknowledgment must say so

Canceled checks, bank statements, and credit card statements do not satisfy the acknowledgment requirement for gifts of $250 or more.

Non-Cash Charity:

For non-cash charitable donations in excess of $500, the following information will be reported on the tax return:

a.) Name and address of the organization(s) to which you donated the goods.

b.) Fair market value of goods donated to each charity (this is generally substantially less than the original purchase price).

c.) Description of goods donated

d.) Date(s) of contribution.

A person donating property valued at more than $5,000 must obtain a qualified written appraisal.

Note: Unless you donated newly purchased items (such as for children's Christmas charities), you will need to find the fair market value of the items that you donated (if not shown on your receipt).  You should be able to make a good estimate using the Salvation Army Valuation Guide.

Examples of Nondeductible Donations: 

• The value of your time and services

• Most contributions to foreign charitable organizations—including foreign churches—are not deductible. However, U.S. charities that operate abroad (including U.S. churches with overseas missions) are still treated as U.S. organizations, and donations to them remain deductible.

• Donations made to GoFundMe Personal campaigns are generally considered to be personal gifts

• A contribution to a nonqualified organization

• The part of the contribution for which you receive a benefit

• Your personal expenses

• Appraisal fees

• Contributions to specific individuals

• Contributions to political organizations and candidates (state rules may vary)  

• Contributions from which you benefit:  

  If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. 

  Example: At a fundraising charity, you pay $200 for one ticket which includes dinner.  The dinner is valued at $75.  Your deductible contribution is $125 ($200 minus $75)

Penalty
You may be liable for a penalty if you overstate the value or adjusted basis of contributed property.

The penalty is 20% of the amount by which you underpaid your tax because of the overstatement, if:

1.       The value or adjusted basis claimed on your return is 150% or more of the correct amount, and

2.       You underpaid your tax by more than $5,000 because of the overstatement.

The penalty is 40%, rather than 20%, if:

1.       The value or adjusted basis claimed on your return is 200% or more of the correct amount, and

2.       You underpaid your tax by more than $5,000 because of the overstatement.