Do you regularly make donations to charitable organizations? It feels great to help out those in need, and you can even get a benefit at tax time in the form of a deduction. In some cases, you may be eligible to deduct your donation from your taxes. The following facts can help you determine if your donation is able to be deducted.
Organization: You must donate to a charity qualified by the IRS if you want to claim a deduction. Any charitable gifts made to individuals, political associations, and candidates are not tax-deductible.
Itemized: You have to itemize your deductions to claim a donation. File Schedule A, Itemized Deductions with your regular Form 1040.
Benefits: If you received any compensation or benefits for your donation, such as meals, event tickets, or other goods, your deduction amount may be limited. In these cases, you are only able to deduct the amount donated that exceeds the value of the benefit.
Value: Donation amounts for property are determined using the fair market value. Usually, you determine the value of donated property based off what you can actually get if you were to sell the item.
Noncash: If you donate gifts that aren’t cash, and the amount exceeds $500, you will be required to file Form 8283, Noncash Charitable Contributions with your regular return.
Records: Ensure that you keep all documentation to support the amount of the donation you gave. Each donation may have a different type of proof, so save receipts and documentation. If you donate cash, you need a written record.
Cash: If you donate more than $250 worth of goods or cash, the charity will need to provide a written statement, documenting the amount and description of items donated. If any benefits were received, they should also be listed on the document.