Charitable Contributions that Can Double as Good Tax Deductions
While charitable acts are selfless in nature, the U.S government recognizes that tax deductions for charitable contributions encourages further donations. So as a way to encourage these efforts, the IRS allows many monetary and in-kind donations to be deducted on your tax return. If you’ve ever wondered, “Are all charitable contributions tax deductible?,” now is a good time to examine the donations you’ve made in the past year.
It probably goes without saying, but when you hear advice referring to “cash donations,” those contributions don’t literally have to be in cash, in order to qualify for tax deductions. (In fact, if you donate cash, make sure you get a paper receipt from the charity.) Whether you’ve made the donation online with your credit union debit card, given a reputable charity your credit card number, or have sent a check in the mail, all of these are qualified forms of a monetary donation.
The majority of organizations identifying themselves as charities will be acceptable for tax deductions, but it’s always smart to check with an organization such as Charity Navigator to make sure they are considered reputable. Among those organizations for which donations can be used for tax deductions are:
- National charities such as the United Way or Red Cross
- Tax-exempt groups like hospitals and schools
- Places of worship
- Charitable arms of lodges, fraternities or veterans’ groups
- A government agency or unit using the donations for public good, such as for your local library or to fund civil defense and emergency responder training and equipment
“In-kind” donations can also count as tax deductions. Everything from concert tickets and used cars, to more valuable contributions such as stock or property, are contributions that shouldn’t be forgotten come tax time.
When it comes to determining how much to claim for the deduction, a solid, reputable charity will come through with detailed paperwork. Each type of donation comes with different IRS guidelines regarding whether you should claim the equivalent of the goods or services “at fair market value,” or “only the amount above fair market value.” A detailed receipt from the nonprofit is a good first step to determining what category your donation fits into.
Among the non-cash contributions you may be able to claim are:
- Used clothing, furniture, dishware and other household articles deemed to be in good condition
- Old or unwanted vehicles
- Your professional services
- Stocks and bonds
- Items for auction, including wine, estate jewelry, paintings, and timeshare vacations
Claiming Your Deductions
Depending on the size and the nature of your donation, you may need to file extra forms with your taxes in order to take the deduction. Your credit union is often a good source of financial information and record keeping, when it comes to monetary donations you’ve already made. But keep in mind that even if your credit union helps you find the canceled checks needed to jog your memory, you will still need to contact the charity to replace a lost receipt if it’s over a certain amount (typically $250).
Once you have your paperwork, the tax forms are fairly straightforward. Even if you don’t have your own accountant, most tax preparation software programs have programs which answer those “charitable contributions tax deductible” quandaries.
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