Tax Deductions and Charitable Donations

Before you decide which charities are going to receive your donation, you'll probably want to undertake a few basic investigations.


Find out the non-profit charity's exact name and address. Ask for copies of the non-profit charity's financial records including the annual report, budget, financial statements, list of board members and latest tax returns.

Find out what percentage of your donations will be used for the actual work of the charity.

Ask if the charity has the IRS 501c3 tax-exempt charitable status; your contributions may qualify as a tax deduction from your federal income tax.

When donating money, you should never hand over cash; always use a credit card or write a check so that you can keep accurate records. If you do write a check, be sure to make it payable to the charity, not to an individual. For donations of $250 or more, you must obtain a written receipt or acknowledgment from the charity at the time that the donation is made, if you plan to deduct it from your taxes.

In any tax year, you may deduct donations representing up to fifty percent of your adjusted gross income (AGI) by detailing the individual items on your IRS tax return. However, if a charitable donation is so large that it is not fully tax deductible in the year of the gift, as a result of AGI limitations, then the excess deduction may be carried forward for up to five years.

Property donated to qualified US charities is also fully deductible from federal income tax, with the following restrictions:

If the property has appreciated in value, the deduction for the donation to a qualified charity may not exceed thirty percent of the taxpayer's AGI for that year. Deductions may not exceed twenty percent of the AGI for that year for donations to private foundations.

In general, a charitable donation of property is usually valued at the fair market value of the property on the date of the donation.

Tax laws related to donating property are complex. Consider discussing any property donation with a qualified tax lawyer or consultant before making any final decisions. This will help you avoid any potential problems.