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