When you give to charity, you get a deduction on Schedule A of your Form 1040. It sounds straightforward.
With new rules, however, you need to be careful that you've met all the requirements to claim your deduction.
The IRS no longer allows you to put cash donations in the offering plate or Salvation Army bucket and take a charitable contribution deduction with no receipt. You must have acknowledgement from the charitable organization of your donation, and a statement that you did not receive anything material in return (if that's true). You may also use bank records, such as a credit card statement or a canceled check, or records of payroll deductions for charitable contributions.
If you receive something in return for your donation, but the cash value of the item you receive is less than the amount you pay, you should receive a statement from the charitable organization telling you how much you paid, how much the item is worth, and your charitable donation.
For example, say you pay $150 for tickets to a fund raising ball. The value of the ticket is determined by the charitable organization to be $75. Your charitable contribution is $75 ($150 - $75 = $75).
If you make a noncash contribution, it's important to deduct the right amount, and to be able to show the IRS how you arrived at that amount.
When you take a bag of household goods or clothing to a local nonprofit thrift shop, the charitable organization generally offers to give you a receipt. The receipt may be blank except for the name of the organization and the date - you are responsible for keeping track of what you donated and determining the value of your donation. Be sure to write what you donated on the receipt or an attached statement.
For most items you give to charity, you can deduct the lesser of your basis in property - generally what you paid for it - or its value when you donate it. That's generally the amount you could have gotten if you sold the items; for example, if you'd had a garage sale.
If you need help determining how much common household items and clothing are worth, use Donation Assistant in TaxAct Plus.
Although the value of items varies considerably by original value, condition, and demand, Donation Assistant helps you maximize the deductible value of your donations.
In addition, you can track all your charitable donations easy, fast and free with Donation Assistant® by TaxAct mobile app. Use it throughout the year to help maximize your deduction for cash, non-cash and recurring donations at tax time.
The app provides more than 1,300 audit-backed values for clothing and household items. At tax time import your donations into TaxAct Plus to maximize deductions.
If you donate noncash items worth less than $250 (per donation), a receipt is all you need to take a charitable tax deduction.
If you donate a noncash item worth $250 or more, but not more than $500, you must have a detailed, written acknowledgment from the organization that includes the name and address of the organization, the date and location of the contribution, description of the donation, and an estimate of the item's value.
If you donate an item worth more than $500, but not more than $5,000, you must also have records of how and when you acquired the property, and how you determined your basis in the property; for example, what you paid for it when you purchased it.
When you donate items worth more than $5,000, in addition to the above information, you must obtain a qualified written appraisal of the donated property from a qualified appraiser.
Donating a car and taking a tax deduction for the fair market value of the car isn't as easy as it was a few years ago when you could deduct the "blue book" value of a donated vehicle.
Now, if the vehicle is worth more than $500, you can only deduct the amount for which the organization sells your car, probably at an auction, or the car's fair market value when you donated it - whichever is less. When you donate the car, you don't know what price the car will bring.
If it sells for far less than you anticipated, you may be disappointed in your deductible contribution amount. There are exceptions if the charity uses the vehicle or makes improvements to it.