Are United Way Contributions Tax Deductible?

If you give to charities such as the United Way, there’s a nice benefit for you: your contributions are tax deductible. In order to claim your deductions, you must give to a qualified organization, you must keep a record of your donations and you must itemize your deductions when you do your tax return.

Contributions are only tax deductible when you give to a properly registered charity that is a 501c3. The United Way is such an organization, and each chapter will have its own tax ID number that confirms its status. Find out your local chapter’s number when you give your donation, so that you can note it on your tax return.

If you give a cash donation to the United Way, your taxable income is reduced by the same amount, up to 50 percent of your adjusted gross income. If you give property, anything from secondhand clothes to real estate, you may deduct the fair market value of that donation. IRS Publication 561 shows you how to determine the fair market value of what you’ve given.

The IRS requires you to keep records of any donations that you make, so that you can properly claim your deduction. You need a bank record of the transaction or a written communication from the United Way confirming your donation. This should include the date and amount of the contribution and should be on United Way letterhead. It must also specify whether you obtained any goods or services in return for the gift.

When you do your taxes, itemize your deductions according to your records on Form 1040, Schedule A. You do not need to include the paperwork relating to your donations in most instances, but you must keep it in case of an audit. If your total deduction for noncash gifts is more than $500 you must fill out Form 8283 and attach it to your tax return. If the property is worth more than $5,000 you must get a qualified appraisal of the property and attach it to your tax return.