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Tax Deductions for Charitable Donations

Want a quick pick-me-up? Try giving to charity. It helps others, feeds your soul and -- oh, yeah -- it can be tax-deductible too!

Photo: Thinkstock / The Nest

Donating to charity? You can reduce your taxable income by claiming your donations to qualified charitable organizations -- provided that you itemize your deductions when you file, as opposed to using the standard deduction. In order to qualify as a deduction, your donation must go to one of these IRS-certified qualified organizations:

  • Nonprofit religious group
  • Nonprofit educational group
  • Nonprofit charitable group

These groups are often referred to as 501(c)(3) organizations. Donations made directly to needy individuals don't count as charitable donations.

Money Donations

Money donations are donations made directly to a nonprofit organization using one of these payment methods:

  • Cash
  • Check
  • Credit card
  • Debit card
  • Payroll deduction
  • Automatic withdrawals from your bank account

Noncash Donations of Less Than $250

For these donations, the organization must give a receipt showing:

  • Organization’s name and address
  • Date and location of donation
  • Reasonably detailed description of the property donated

If you don’t or can’t get a receipt (say you donate goods at an unattended drop-off site, for instance), you must keep a reliable written record for each donated item showing:

  • Organization’s name and address
  • Date and location of donation
  • Reasonably detailed description of the property donated
  • Fair market value of the donation at the time of donation, with an explanation of how you determined the fair market value
  • Cost or other basis you had in the donation if you must reduce the fair market value by appreciation. The record must also show the amount of the reduction and how you determined it.
  • Terms and conditions attached to the donation
  • If you’re contributing less than the entire interest in the donation during the year, you must show the amount you’re claiming as a deduction for the year as a result of the donation. If the other portion of the interest has been donated, you must provide details of each donation of the other interests.

You can claim charitable donations on Form 1040, Schedule A.

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