What are the rules for deducting charitable contributions?

IRS Guidelines for Deducting Charitable Contributions

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Eligibility for Deducting Charitable Contributions

1. To deduct charitable contributions, you must itemize deductions on Schedule A (Form 1040), Itemized Deductions.

2. Contributions must be made to qualified organizations.

Cash Contributions

1. Cash contributions are deductible up to 60% of your adjusted gross income (AGI) in most cases.

2. A special provision for 2020 allowed a deduction for cash contributions up to 100% of AGI.

3. For 2021, individuals taking the standard deduction could claim a limited deduction for cash contributions up to $300 ($600 for married filing jointly).

Recordkeeping and Substantiation

1. For any monetary contribution, you must maintain a bank record or a written communication from the qualified organization.

2. For contributions of $250 or more, obtain a contemporaneous written acknowledgment from the charity.

3. For noncash contributions over $500, you must complete and attach Form 8283, Noncash Charitable Contributions, to your return.

Noncash Contributions

1. Generally, you can deduct the fair market value of noncash property donated to qualified organizations.

2. Special rules apply for donations of certain types of property like vehicles, inventory, and appreciated property.

Deduction Limits and Carryovers

1. Deduction limits vary from 20% to 60% of AGI, depending on the type of contribution and the organization.

2. Contributions exceeding AGI limits may be carried over to subsequent tax years.

Special Considerations

1. If you receive a benefit in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit.

2. Contributions to donor-advised funds and certain private foundations may have different rules.

Valuation of Donated Property

1. For determining the value of donated property, refer to Publication 561, Determining the Value of Donated Property.

Disclosure Requirements

1. Charitable organizations must provide written disclosure for any quid pro quo contribution over $75.

For more comprehensive rules and examples, refer to the IRS publications.

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Sources:

Charitable Contribution Deductions | Internal Revenue Service 2024-08-04

Topic no. 506, Charitable contributions | Internal Revenue Service 2024-08-04

Deducting Charitable Contributions at-a-Glance | Internal Revenue Service 2024-08-03

Substantiation and Disclosure Requirements | Internal Revenue Service 2024-08-03

2023 Publication 526 | Internal Revenue Service 2024-08-03

Publication 561 (02/2024), Determining the Value of Donated Property 2024-07-31

Charitable organizations: Substantiation and disclosure requirements 2024-08-03

Expanded tax benefits help individuals and businesses give to charity during 2021 2024-08-04

Frequently Asked Questions on Virtual Currency Transactions 2024-08-03