Whether you're giving away extra stuff you found cleaning out your garage or contributing money to a worthy cause, giving to charity helps those who need it. It also can be a bonus for your bank account when it comes to filing your taxes. However, not all gifts are deductible, and you can only claim a deduction if you itemize -- meaning you don't claim the standard deduction.
Only gifts to qualifying organizations get you a tax break from the Internal Revenue Service. According to IRS Publication 526, qualifying organizations include religious organizations, non-profit hospitals and schools, government organizations and charitable organizations like the American Red Cross or the Girl Scouts. If you're not sure if an organization qualifies, ask the organization or check the IRS's online database of exempt organizations.
Valuing Your Deduction
If you write a check to a charity, determining how much you get to write off is easy because you use the amount you donated. If you give property, however, the determination can be a bit more complicated. The IRS instructs taxpayers to use the "fair market value" -- the price a willing buyer and willing seller would agree to for the goods. Though the IRS doesn't have a price list for specific items, Publication 526 notes that the value of used items is often substantial lower than a similar new item. Some charities, like the Salvation Army, publish lists with price ranges for frequently donated items so you can get an idea of what your donation is worth.
Even though the IRS doesn't expect you to attach receipts from each gift you make to your tax return, keep records for yourself in case you ever face an IRS audit. You can use a bank statement or cancelled check for donations under $250, but need a receipt from the organization for larger gifts. When donating property, you always need a receipt unless you're making a donation of goods worth less than $250 and it's not practical to get a receipt, such as if you drop off clothing at a drop box. If you don't get the receipt before the later of the date you file your taxes or the date your return is due, you could lose the entire deduction.
Gifts to Individuals
No matter how much a person might need a gift, you can't deduct the amount you give or value of the item. The IRS forbids deductions for gifts you make to individuals. For example, if you give your used car directly to a single mother in need, you can't claim a tax write-off for your kindness. However, if you give the car to a charitable organization that then distributes it to a single mother, you can take the deduction.
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