How to File Your Donations with Taxes

If you donate money or non-cash items to a charitable organization, you may itemize those deductions on that year’s tax return – if you make your donation before December 31st.

Doing so reduces your total taxable income, and gets you a better tax deduction. However, if you make your donation after the New Year, you’ll need to write it off on the following year’s tax return. Additionally, the process of filing your donations will vary, depending on your contribution type and amount.

To make your donation as an individual taxpayer, you’ll generally need to complete IRS Form Schedule A and attach it to Form 1040. If you make a non-cash donation of more than $500, however, you must also complete IRS Form 8283. While many taxpayers hire an accountant to assist them in completing these forms, you may choose to use online software such as TurboTax, Credit Karma or Tax Act if you’d rather file on your own. To learn more about filing your charitable donations, review the information below.

Make Sure the Contribution Counts

Before you may file your charitable donations, you must first determine whether the contribution qualifies as a tax deduction. For instance, any donations you make to charitable, educational or religious groups such as 501(c)(3) nonprofit organizations usually meet this requirement. Several examples include the American Red Cross, Salvation Army, United Way, Make-A-Wish and the Boys and Girls Club of America. Other qualifying recipients may include scientific organizations, federal or state governments, and organizations that work to reduce or prevent cruelty to animals and children, such as PETA or Childhelp.

To determine whether the recipient of your gift is approved by the IRS, you must obtain the organization’s tax identification number. Then, you may use this information to conduct a Tax-Exempt Organization Search through the website of the IRS. In other cases, the organization’s website may include this information or make note of their tax exemption status. If you donate to a needy individual—rather than a nonprofit organization—your donation generally will not qualify for a tax deduction.

Moreover, qualifying donations may be made by cash, check, credit or debit card, automatic withdrawal or by payroll deduction. Other types of donations may include non-money contributions, such as automobiles, toys, clothing and household items. However, you generally can’t write off the entire amount of your contribution if you receive a gift in return for your donation. If you refuse the gift, or the value of the gift falls below a designated amount, you may claim the full donation amount.

Keep a Record of Your Donations

Whenever you make a charitable contribution, make sure to obtain a receipt from the nonprofit organization. Your personal records cannot be used as proof in most cases, as you typically need written evidence from the charitable organization. If you made a cash donation of less than $250, for instance, you may submit one of the following as evidence of your contribution:

  • A receipt from the organization
  • Statements from your bank, credit union or credit card company
  • A canceled check
  • A pay stub, W-2 form or pledge card (for payroll deductions)

Moreover, the evidence you need to prove your donation varies depending on the contribution type. For instance:

  • If you made a non-cash donation of less than $250, you must submit a receipt from the organization. The receipt must include the organization’s name and address, a description of the non-cash donation and the date and location in which the contribution took place. If you cannot obtain a receipt, you may keep a written record of the donated items.
  • If you made a cash donation of more than $250, you must obtain a written acknowledgement from the organization. The acknowledgement must include the donation type and amount.
  • If you made a non-cash donation of between $250 and $500, you must obtain a written acknowledgement or a receipt from the nonprofit organization.
  • If you donated between $500 and $5,000 in non-cash items, you must obtain a written acknowledgement from the organization, and you must keep a personal record of the donation. Your record must include the approximate date on which you acquired the property, along with a reason. For instance, you must specify whether you purchased or inherited the property, or whether you received it as a gift. Moreover, the same rules apply if you donated more than $5,000 in non-cash items.
  • If you donate a vehicle to charity, the organization will send you Form 1098-C within 30 days if the nonprofit sells the vehicle. This form will include the sale price of the vehicle as well as your deduction amount. If your automobile is valued below $500, however, you can deduct the actual value of the vehicle when claiming your deduction.

Note: If you believe that one donated item or a group of similar items is valued at more than $5,000, you must obtain a written appraisal.

Complete Your Tax Forms

After you’ve gathered the required type of evidence to support your charitable donation, you must complete any applicable tax forms. First, you’ll need to complete the Itemized Deductions tax form (IRS Schedule A) and attach it to Form 1040 if you’re an individual taxpayer and wish to itemize your deductions. You’ll include your charitable donations under the “Gifts to Charity” section. After you itemize your deductions, your total amount of donations will be subtracted from your taxable income.

Moreover, you must also complete the Noncash Charitable Contributions tax form (IRS Form 8283) if you donated more than $500 worth of non-cash items in one year. These non-cash items may include artwork, stock or appreciated property, household goods, clothing or vehicles worth $500 or more. If these conditions apply to you, you must complete Form 8283 and submit it, along with Schedule A and Form 1040.

When completing Form 8283, you must provide the following information for each organization in which you donated to:

  • The name and address of the nonprofit organization
  • A description of your donated items
  • The vehicle identification number (VIN), if you donated a car to charity
  • The date of your contribution
  • The fair market value (FMV) of the non-cash item and the method you used to determine the item’s FMV

If your non-cash donation is valued at more than $500, you must also describe how you acquired the property, and the date in which you received it.

Related Article: How Donations Can Benefit You Financially

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