Charitable contributions you make throughout the year can often be deducted when it comes time to file your tax return. However, there are some rules about which contributions can be deducted, and you will have to keep records of your donations to include with your return. Learn more from your tax preparer, or at IRS.gov.
Itemizing your deductions
If you plan to deduct your charitable contributions, you'll have to file an itemized tax return instead of filing with a standard deduction. This is easy to do, but it is not always the best approach. Depending on your finances, you may be better off taking a standard deduction. You can decide by adding up your expenses for medical care, mortgage interest, casualty losses, charitable contributions and other deductions, then comparing the total to the amount of the standard deduction.
Before itemizing your charitable contributions, you will have to make sure that your donations were given to qualified, tax-exempt organizations. These are often called 501(c)(3) organizations. Payments to individuals, candidates and political organizations are never deductible. You can get proof of tax exemption from charities by asking for their tax ID number, or you can look up their status yourself on the IRS.gov website.
Merchandise, goods or services
The amount of your deduction depends on whether you simply donated the item or received merchandise, goods or services in exchange for your contribution. If you received any items or services, such as t-shirts or concert tickets, you will only be able to deduct part of the money you donated. Your receipt should show what goods or services were given and how much of your contribution is eligible for a tax deduction.
Receipts for cash donations
You are required to have proof of your charitable deductions. For cash donations of less than $250, this can come from a written receipt, a canceled check or statements from your bank account or credit card. Cash donations over $250 require a written receipt from the charitable organization. This receipt should show the amount of your cash contribution, as well as a list of goods or services that were exchanged for the donation (if any) and an estimate of their value.
Non-cash charitable contributions
For non-cash charitable contributions, you must evaluate the fair market value of the items donated. This means the price you think you could get if you sold the item today, not the price you originally paid for it. You should keep receipts of all non-cash donations, although you can give your own written record of donations worth less than $250 if a receipt is impossible (such as giving at a charity drop-box). Non-cash donations valued between $250 and $500 must have a receipt from the charity listing the items and their estimated worth. You will need additional documentation for donations over $500 and appraisals on items worth $5,000 or more.