Tax Deductible Donations: Rules and Tips

 

When tax season comes around, do you ever find yourself asking yourself, "Why did I not give more to charity so I could claim the tax deductions?" Maybe not, but it could be a fair question. You can receive a sizable deduction if you've given a sizable amount to charity.

Or maybe you did donate a sizable amount of money or physical items to charity, but you forgot to track it so you could itemize it or claim it. This is a more common scenario.

It's important to keep a few things in mind when you're planning on claiming tax-deductible donations in the coming tax year.

Itemizing vs Taking the Standard Deduction

It may end up benefiting you to itemize your charitable donations on your tax return, but if the sum of your itemized deductions is going to be less than the standard deduction, you would be better off just taking the standard deduction. The only time it benefits you to itemize items is when you know they will be more than the standard deduction. You'll want to check current tax law to determine what your standard deduction will be for your filing status before you make the call. If you decide to itemize, you'll need a Schedule A to accompany your tax return paperwork.

Make Sure You're Donating to a Qualifying Organization

A qualifying organization is defined as an organization that is tax-exempt according to section 501(c)(3) of the Internal Revenue Code. You'll know an organization qualifies as this if they explicitly say on their website or other documentation that they are a 501(c)(3) organization. However, 501(c)(3) organizations typically include nonprofit educational agencies, nonprofit institutions, organizations that offer nonprofit programs, and religious organizations.

One important thing to note is that just because an organization is nonprofit does not mean they are classified as a 501(c)(3). If you doubt an organization's status, you can always utilize the IRS Tax Exempt Organization Search tool to confirm.

Another little thing to note is that your entire contribution won't necessarily be tax-deductible. Depending on the type of contribution and type of organization, your donation deductions may range anywhere from 50% of your adjusted gross income to less than 20%. If you're concerned about this, we suggest looking at IRS Publication 526 on Charitable Contributions.

Track Your Contributions

No matter how small the amount of your donation-- track it. Qualifying documentation such as a bank statement, credit card statement, W-2 or pay stubs (if the contribution was an automatic deduction), or a receipt is necessary to prove that you made a contribution to a qualifying organization.

Requirements for Cash or Property Donations in Excess of $250

According to the IRS, you must get a written letter of acknowledgment from the charities you donate to if the amount (or value) is more than $250. The letter must include:

  • The amount of cash you donated
  • Whether or not you received anything in return for your donation
  • An estimate of the goods or services you donated

This has to be received by the date you file your taxes for the year you made the contribution, otherwise it won't be counted as valid.

Requirements for Non-cash Donations Worth at Least $500

The IRS requires you to fill out Form 8283 for any non-cash donations valued over $500. If the value is appraised to be worth more than $5,000 in total, then you must attach an appraisal of your items.

Don't Forget to Deduct Your Volunteer Hours

Time is money, and your service to 501(c)(3) organizations can't be deducted. However, the expenses related to that volunteer time can be deducted, as long as they haven't been previously reimbursed and are not considered personal, living, or family expenses. So, for example, you can deduct your mileage, receipts for gas or tolls, etc. For 2019, it was 14 cents per mile when you used your vehicle in service of a 501(c)(3) organization.

Donating to Idaho Youth Ranch

There are many ways to give to Idaho Youth Ranch that will both help us continue to provide life-changing therapies and help you meet your personal charitable goals, including:

  • Planned Giving: Your legacy can live on through the kids that we help.
  • Appreciated Assets: Giving stock to Idaho Youth Ranch can result in a federal income tax deduction as well as an Idaho state tax credit. You won’t have to pay capital gains on the transfer, and you will help Idaho’s kids with a gift equal to the full value of the stock.
  • Monthly Giving: Your monthly gift means strong and timely funding that allows IYR to spend more of our time and money on transforming the lives of Idaho’s most vulnerable and desperate youth.
  • Non-cash Donations: You can donate non-cash items to any of our Thrift Stores. (Learn more here)

Learn more about the ways in which you can give to help the youth of Idaho that we serve. You can also just donate today!

Please note that Idaho Youth Ranch cannot give tax advice about individual circumstances, please contact your tax professional with questions.