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Five Facts about Charitable Contributions


Throughout the year, many taxpayers contribute money or gifts to qualified organizations eligible to receive tax-deductible charitable contributions. Here are five facts about charitable donations:

  • Qualified Charities. A taxpayer must donate to a qualified charity to deduct their contributions. A qualified charity is one that is recognized as an IRC Section 501(c )(3) entity.  Contributions to other 501(c ) entities like (c )(7) social clubs, (c )(8) fraternal societies, and (c )(5) business associations and labor organization are not deductible as charitable contributions.  Also, gifts to individuals, political organizations, or candidates are not deductible.
  • Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize their deductions.
  • Getting Something in Return. Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets. Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation.
  • Donations of $250 or More. If a taxpayer donates $250 or more in cash or goods, they must have a written receipt from the charity. The statement must show:
    • The amount of the donation.
    • A description of any property given.
    • Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.
  • Type of Donation. For donations of property instead of cash, a taxpayer can only deduct the fair market value of the donated item. Fair market value is generally the price they would get if they sold the item on the open market. Special rules apply to certain types of property donations, such as cars and boats. 

    The following are helpful links to The Donation Value Guide used by Salvation Army and Goodwill to help you determine the approximate tax-deductible value of some of the more commonly donated items.  It is up to you to assign a value to your donated item. 

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