Tax Season Tips for Writing Off Charitable Donations
If you made donations to your church, a favorite charity or another nonprofit before year-end, you may be able to write them off when you file your taxes for 2017 in April.
Here are some of the most important rules to know when writing off charitable donations.
1. Writing off charitable donations only works for qualified organizations.
To claim a tax deduction for your charitable gifts, the organization you’re donating to has to have the seal of approval from the Internal Revenue Service. Essentially, it has to be an eligible organization with tax-exempt status. That includes:
- Churches, mosques, synagogues, temples and other religious organizations
- Charitable organizations like Goodwill, the Salvation Army, the American Red Cross and the United Way
- Nonprofit schools, hospitals and volunteer fire departments
- Veterans’ groups and certain cultural organizations
- Public parks and recreation facilities
Note that this list does not include political organizations. If you’re not sure whether a charity or nonprofit qualifies, you can use the Exempt Organizations Select Check tool to verify that they’re eligible.
2. You’ll need a paper trail.
Some charitable donations are tax-deductible and, just as with any other deduction, you’ll need proof to back it up in case the IRS decides to take a closer look at your tax return. If you’re interested in writing off charitable donations, don’t forget to get a receipt from the organization you’re donating to. The receipt should include:
- The name of the organization
- The amount you’re donating (if you’re donating money)
- A description of items donated (if you’re donating things like books, toys, clothes or household items)
- A statement saying whether any goods or services were received by you in exchange for the donation, and a description and good-faith estimate of the value of any goods or services received in return for the contribution. If the goods or services received consisted entirely of intangible religious benefits, the statement should say that.
That last one is especially important: The IRS only allows you to deduct donations, less any value you received in return. If you donate $500 to your local arts organization, for example, and they give you two free tickets to a concert that have a value of $100, you’d only be able to deduct $400 of the donation.
3. You have to itemize to write off charitable donations.
Certain tax deductions can be claimed, regardless of whether you itemize or claim the standard deduction. When it comes to charitable donations, however, you can only snag this tax break if you itemize your deductible expenses on Schedule A.
And just how much can you deduct on Schedule A for charitable giving? Currently, in general, the IRS allows you to deduct contributions up to 50% of your adjusted gross income (AGI) for the year. So if your AGI was $100,000, you may be able to deduct $50,000 in charitable donations. However, note that contributions to some organizations require you to apply a lower or higher limit. Also, remember that the total amount of all itemized deductions, including charitable contributions, you can claim is limited based on your filing status and income.
One final thing to note is that to write off donations for the current tax year, they have to have been made on or before the last day of the year. If you missed the December deadline for year-end donations for 2017, for example, you might still use these tips to get a head start on planning your charitable contributions (and your tax deductions) for the next tax year.