In order to be considered tax-deductible your donation must meet a few restrictions:
1. You actually have to donate the cash or property; a pledge or promise to pay does not count as a deduction until it is actually paid.
2. You must itemize your return in order to claim the deduction. Taxpayers taking the standard deduction cannot deduct charitable contributions.
3. You have to meet the IRS’ record keeping requirements, and will need to keep all receipts, canceled checks, acknowledgement letters, and appraisals for donated property.
Cash Donations
All monetary contributions made either by check, money order, credit card, or electronic funds transfer, etc. to qualified nonprofit groups can be deducted on your tax return. Just be sure that you have adequate records for all contributions.
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Non-Cash Donations
Non-cash donations or donations of personal property can also be deducted on your tax return. However they are subject to strict record keeping and substantiation rules. Meaning, you must be able to substantiate the market value of the items donated, and keep written acknowledgements from the charity. If your total non-cash contributions total more than 0 you will also need to attach IRS Form 8283 to your tax return, and if the value of any item exceeds ,000 then you must obtain a written appraisal of fair market value.
Claiming the Deduction
If you itemize your tax return, you can include charitable contributions along with the rest of your deductions on Schedule A of IRS Form 1040.
Limits on Contributions
The IRS imposes a few limits on the amount of contributions you can deduct. Generally, you can deduct cash contributions in full up to 50% of your adjusted gross income, and donations of property up to 30%.
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