The tax code rewards your altruistic behavior by giving you a tax deduction for donating to charity. Each dollar you give away can lower your taxable income. But if you're using Form 1040A or 1040EZ for your taxes, all your goodwill goes away – at least from the perspective of the Internal Revenue Service. As of 2018, those forms are being eliminated, and all taxpayers will use Form 1040 anyway.
Since itemized donations must be recorded on Schedule A, taxpayers will not be able to use Form 1040A. Instead, they will need to use Form 1040 and report the final figure from Schedule A on line 40.
Itemized Deductions and Form 1040A
Tax deductions are broken into two big categories: adjustments to income and itemized deductions. Adjustments to income are also called above-the-line deductions because they appear on the first page of the and they reduce your adjusted gross income. You can claim adjustments to income without affecting your standard deduction.
Itemized deductions, on the other hand, pose a choice to taxpayers: either take the standard deduction for your filing status and no itemized deductions, or give up your standard deduction and write off the sum of your itemized deductions, which include charitable contributions as well as things like mortgage interest and state and local taxes.
Claiming the charitable donation deduction, like any other itemized deduction, requires that you report the donations on Schedule A. When you file your tax return, you must use Form 1040, not the 1040A short form, because it's the only form that allows you to claim itemized deductions instead of your standard deduction. Follow the IRS 1040 itemized deductions instructions on the form when filling it out. After combining your charitable contributions with your other itemized deductions, the total goes on the main body of Form 1040.
If you decide you want to use Form 1040 to deduct your charitable donations, you must divide your giving between contributions made by cash or check and property donations If you're donating property worth more than $500, you must also complete Form 8283 and file it with your tax return.
Contributions of property worth more than $5,000 generally require a qualified appraisal, but otherwise you usually don't need to attach any proof of your contribution to your tax return. But you can't file your taxes until you get the receipt from the charity, and you're required to keep records in case your donation is questioned by the IRS. The only times you won't need a receipt from the charity are when you make a donation of less than $250 of goods and getting a receipt just isn't practical, such as leaving clothing at a drop box, or when you make a cash donation of $250 or less and you have a canceled check, bank statement or credit card statement to prove the donation.
If you plan on donating to charity and deducting the value of your donation on your taxes, make sure that charity is recognized by the IRS as an organization eligible to receive tax-deductible charitable contributions. You can find a list of charities through the exempt organizations select check tool on the IRS website that are eligible. Also, any donated items like clothing should be in good used condition or better to qualify for a deduction. If clothing isn't in good used condition or better, it may require an expert appraisal for deductions of more than $500.
2018 Tax Law Changes
The general law around charitable donations isn't changing for tax year 2018, but tax forms 1040A and 1040EZ are being eliminated. All taxpayers who normally used these forms will instead use a new, simplified Form 1040. Taxpayers will still use Schedule A to claim itemized deductions.
The standard deduction is also increasing for 2018, meaning some taxpayers who previously itemized to claim charitable deductions will now save both money and time by simply taking the standard deduction.
2017 Tax Law
Use the old Form 1040 to file with itemized deductions for 2017 and earlier tax years, even if you're filing in 2018 or a later year. Also use the old standard deduction in determining whether to itemize for those earlier years and whether to use Form 1040, 1040A or 1040EZ.
- Internal Revenue Service: Topic 501 - Should I Itemize?
- Topic 352 - Which Form – 1040, 1040A or 1040EZ?
- Internal Revenue Service: Schedule A Instructions
- Internal Revenue Service: Publication 526 -- Charitable Contributions
- Internal Revenue Service: Determining the Value of Donated Property
- Internal Revenue Service: Know these Facts Before Deducting a Charitable Donation
- Forbes: New: IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More
- IRS: Form 1040 Draft for 2018
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."