Deducting Contributions

 

Only itemizers can deduct contributions. Contributions are deductible for the year in which they are actually paid or delivered. Pledges are not deductible until the year in which they are paid.

1. The value of volunteer time or services to a charitable organization is not deductible. However, out-of-pocket expenses directly related to voluntary service are usually deductible.

2. Contributions for which the donor receives a gift or other benefits are deductible only to the extent that the donation exceeds the value of the benefit received.

3. Direct contributions to needy individuals are not deductible. To be tax deductible, contributions must be made to qualified organizations.

4. Keeping records of contributions is essential for itemizers. Acceptable records include bank records and written communications from the charity. Contributions of over $250 require a contemporaneous written acknowledgment from the charity.

5. Donated property may generally be deducted at the fair market value of the property at the time of the contribution. However, there are special rules for the donation of cars and other vehicles.

6. There are over 20 categories of tax-exempt status. In general, only organizations classified as 501(c)3 and 501(c)19 are eligible to receive contributions deductible as charitable gifts. Here is a partial list of tax-exempt categories; “type” descriptions are highly condensed:

Tax codeType of Organization
501(c)3Charity
501(c)4Generally, organizations engaged in substantial lobbying activities
501(c)5Union
501(c)6Business membership
501(c)8Fraternal beneficiary
501(c)10Domestic fraternal
501(c)19Veterans

The IRS provides information on deductibility and related subjects at https://www.irs.gov/pub/irs-pdf/p526.pdf.

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