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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 exceptions for Canadian, Mexican and Israeli charities. To deduct charitable contributions from these three countries, you must have income from sources within those countries.  A contribution to a charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U.S. law.

 

Examples of Deductible Donations:

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.  Auto expenses (generally 14 cents a mile plus tolls, parking fees) if you used your car to give services or donate items to a qualified 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.

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 contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction

 

Always ask for and save receipts when giving to charity!

 

Cash Charity:

In case of audit, the IRS requires proof of any cash contribution 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: 

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.