If you make charitable donations within any given tax year, you may be able to take a tax deduction for your charitable giving.
The available deduction depends on whether you're making a cash donation or a non-cash donation, as well as any applicable limits on the amount of the deduction that you're permitted to take for that year.
Cash vs. Non-Cash Donations
Your charitable donation must be made to a qualified organization, and the amount you can deduct depends on the type of donation you're making:
Cash donations. A cash donation is the donation of money, transferred through several methods such as by check or through payroll deduction. Cash donations are deductible up to a limit of 60% of your AGI.
Non-cash donations. The deductible limit for non-cash donations falls between 20% and 50% of your AGI, depending on the type of non-cash donation that's being made. Non-cash donations include the following types of property:
- New or used clothing or other household items and food
- New or used vehicles
- Income-generating property
- Long-term assets such as stocks and bonds
Generally, the value of your non-cash donation will be based on the property's fair market value, but the full valuation rules can be found in IRS Publication 526.
If the total value of your non-cash donations for a given tax year is more than $500, you will also need to fill out Form 8283. If a non-cash contribution is valued at more than $5,000, you'll need to substantiate the value with a qualified appraisal and fill out Section B of Form 8283.
Additionally, if you receive a benefit for a contribution you make, you will need to deduct the value of the benefit you receive from the deductible amount. For example, if you buy a ticket to a fundraiser being held by a qualified organization, and the ticket includes the price of a meal, you will need to deduct the value of that meal to come up with the amount of the contribution that's deductible.
Note that while you can't deduct the value of services you volunteer to a qualified organization, you can deduct the expenses you incur in performing those volunteer services. The deduction for these out-of-pocket expenses is subject to the limit that applies to donations made to the organization.
To be deductible, your donation must be made to a tax-exempt organization—also known as a 501(c)(3)—such as a religious organization, nonprofit hospital or school, scientific organization, or service organization.
In general, organizations such as for-profit companies and sports clubs do not qualify to accept tax-deductible donations. The list of organizations that do not qualify also includes political organizations (and individual candidates), so political contributions are not tax-deductible.
The IRS maintains a searchable database of qualified organizations, although you should keep in mind that some charitable organizations such as smaller churches may not be included in the database. You can also ask the organization to which you're donating, whether it is a qualified organization.
If you've made charitable donations, you may be able to claim a tax deduction for those donations. The amount of your deduction, however, is subject to specific limits.