IRS Tips on Charitable Giving
In IR-2017-191, the IRS offered seven charitable giving tips to taxpayers. The IRS stated, “Giving money or goods to a tax-exempt charity before December 31 can usually be deducted on that year’s federal income tax return.” These seven tips may help to maximize benefits from charitable gifts.
- Qualified Charities – Only gifts to qualified charities are deductible. The Select Check Tool on IRS.gov is useful for finding a qualified charity. Religious organizations with regular worship services are generally qualified, even though they are not listed on the IRS database.
- Itemized Deductions – Charitable gifts are deductible if you itemize on IRS Form 1040 Schedule A. Most taxpayers will itemize if their deductions exceed the standard deduction. Cash gifts up to 50% of your income are generally deductible. If you give over this amount, the excess gifts may be carried forward and deducted during the next five years.
- Cash, Checks, Credit Cards, Payroll – You need a bank record or written statement from a charity for cash or similar gifts in order to claim a charitable deduction. For a payroll deduction, you should save your paystub or W-2 statement.
- Property Gifts – Clothing and household goods must be in good or better condition to qualify for a deduction. If you give clothing or household goods over $500 in value, you may obtain a qualified appraisal and attach it to your return. Gifts of $250 or more in value require a written acknowledgment from the charity with a description of the gifted property. There are special rules for vehicles and other property gifts. Visit IRS.gov for additional details.
- Donor Benefits – Some gifts involve a transfer back to the donor of goods or services by the charity. The charitable acknowledgement of gifts with a transfer back to the donor must show the value of the benefits transferred. For example, a gift by a donor for the annual charity dinner event will lead to a deduction that is reduced by the value of the dinner.
- IRA Owners – If you are an IRA owner over age 70½, you may make a gift from your IRA custodian directly to a qualified charity. The maximum IRA rollover gift is $100,000 per year. An IRA rollover gift also would qualify for part or all of your required minimum distribution (RMD). See Pub. 590-B on IRS.gov for more details.
- Good Records – You should keep good records of all charitable gifts so that you can prepare your IRS Form 1040. There must be documentation for property gifts. Some property gifts with value over $5,000 will require a qualified appraisal. See IRS.gov for further information.