Most people know that donating to charity can help them save on their income taxes. But the actual rules for charitable deductions can get complicated.
Charitable contributions are a type of personal itemized deduction. Like medical expenses and mortgage interest, you can only deduct them if you skip the standard deduction.
Here's what else you need to know about saving money by giving back.
How do you claim a charitable tax deduction?
To claim a tax break for your gifts to charity, you'll fill out your donations in lines 11-14 of Schedule A. That’s the part of the form that deals with “Gifts to Charity”.
You don’t have to donate money to claim a deduction — other kinds of gifts also qualify. If you make contributions "other than by cash or check," you’ll have to estimate the dollar value of what you're donating. We’ll explain how to do that in a bit!
As mentioned, there’s one key requirement for writing off your gifts to charity: you have to itemize.
Claiming charitable donations as an itemized deduction
You can only deduct your charitable gifts if you choose to itemize instead of claiming the standard deduction. Here are the current amounts:
To get any benefit from itemizing, your deductible personal expenses have to be greater than your standard deduction amount. A single person, for example, would have to spend more than $12,950 on these types of expenses.
As you can imagine, most taxpayers don't spend enough on charitable giving and other itemized expenses to exceed their standard deduction amount. That's why nearly 90% of taxpayers take the standard deduction.
Side note: If you have any expenses from working a freelance or independent contracting job, you can always write those off on top of the standard deduction! Don't get these business write-offs confused with personal deductions like donations.
How much can you deduct for donations?
For the 2022 tax year, you can generally deduct up to 60% of your adjusted gross income (AGI) in monetary gifts.
In 2021, the IRS temporarily allowed taxpayers to deduct up to 100% of their AGI in charitable gifts. But this special allowance has expired.
How much can you deduct for noncash gifts?
If you’re not donating cash, the AGI limit caps out at 50% and may be as low as 20%. For example, there’s a:
- 50% AGI limit for most noncash donations
- 30% AGI limit for capital gain property (assets like stocks, bonds, or even collectibles that have appreciated by the time you’re donating them)
- 20-40% AGI limit for noncash donations that are held in a trust, instead of given to an organization directly (an arrangement the IRS calls contributions “for the use of” a charity”)
What organizations can you donate to for a tax deduction?
Not all donations are tax-deductible. The IRS has special rules about the kinds of organizations you can contribute to, as well as the sorts of contributions you can make.
If you want to deduct it on your tax return, your donation has to go to a qualified charitable organization with 501(c)(3) status — a mouthful that essentially means it's tax-exempt.
Keep in mind: Not all nonprofits have 501(c)(3) status. Some veterans groups and political groups for instance, don't. As a result, donations to them won't always give you tax benefits, even though you’re contributing to a nonprofit.
Examples of qualifying organizations
Luckily, a wide range of charitable groups are tax-exempt. You can even look beyond the usual private foundations and public charity programs (like the ones affiliated with hospitals and educational institutions).
According to the IRS, the following types of groups can count:
- Charitable organizations, like the Red Cross and United Way
- Religious communities, like your church, synagogue, temple, or mosque
- Scientific institutions, like the the Association for Women in Science
- Literary organizations, like the National Book Foundation
- Educational nonprofits, like Girl Scouts of America
- Amateur sports organizations. like the US Olympic & Paralympic Foundation
- Child advocacy groups, like RAINN
- Animal rights organizations, like PETA
- Some government organizations (as long as the gift is earmarked for charitable purposes)
Note that church tithing counts as a charitable donation, so it’s tax-deductible.
What types of charitable gifts are tax-deductible?
As long as you're supporting a 501(3)(c) organization, various kinds of contributions can help you lower your tax bill.
Here are the rules for donating money, items, and even your time.
By cash, we mean any kind of dollar-amount contribution, whether it's made through:
- 💵 Actual cash
- 💳 Credit card or debit card
- ✍️ A check
- 🏦 Electronic fund transfer electronic (EFT)
- 📱 An online payment service like PayPal or Venmo
- 🎁 A gift card
However, stocks, bonds, and other financial instruments don't count. They go in the next category.
What if your charitable giving isn't in monetary form?
This is especially common for patrons of food banks and organizations like Goodwill. (Big-ticket donors will even offer luxury items, like paintings!)
Here are some noncash goods that might be donated:
- 📈 Stocks and bonds
- 🥫 Food
- 👚 Clothing
- 👞 Shoes
- 🛋️ Furniture
- 📺 Appliances
- 🚗 Cars
- 💎 Jewelry
- 🖼️ Art
- 🕰️ Antiques
The IRS allows taxpayers to deduct the fair market value of any goods they donated — meaning, the amount they would sell for on the open market.
Figuring out the value of noncash gifts
Pro tip: Instead of searching for a trained appraiser right away, look for a valuation guide.
“Taxpayers can use one of the online donation guides provided by charitable organizations to estimate the value of noncash gifts,” says Bill Hampton, a tax strategist based in Georgia.
Here are some valuation guides for popular charities:
These guides are useful because they typically focus on the items most commonly donated items.
Goodwill, for example, lists clothing items and home goods. Habitat for Humanity, on the other hand, emphasizes construction supplies.
Local organizations will sometimes provide guides as well.
You can donate expenses that stem directly from your charity work. These might include things like:
- ⛽ Car expenses for drives over
- 🚌 Public transport to and from the site
- 👕 Uniforms to wear as a volunteer
- 📦 Supplies you use while volunteering
- 🍔 Meals, but only if you had to travel overnight
Note that, for car expenses, you can take a standard mileage rate for every mile you drive for charity. For 2022 tax year, that’s $0.14. (That’s much lower than the standard mileage rate for work-related driving!)
These have to be out-of-pocket expenses — not reimbursed by the charity. And you'll need to keep records for everything you spent.
How volunteer expenses compare to work expenses
In a nutshell, these tax-deductible volunteer expenses are similar to the business write-offs you can take when you do freelance work. Instead of paying for them so you can do an independent contracting job, you're buying these things in order to volunteer your time.
If you have business write-offs, use Keeper to keep track of them automatically. Our app will scan your accounts and write off anything you bought for work.
It won't track your charitable donations, but the app will deduct them for you if you file your taxes with Keeper.
Can you write off donated time?
No, volunteer time is never directly tax-deductible.
Taxpayers often assume that, if they donate their time, they can write off its fair market value based on how much they earn when they're working. Unfortunately, that isn't true.
You also can’t deduct the expenses associated with spending your time on a charity, like the cost of childcare.
When it comes to volunteering your time, the only possible tax break is for direct volunteer expenses.
What records should you keep for qualified charitable contributions?
You'll have to keep records for your donations. Here's what's acceptable to the IRS:
- Bank statements
- Credit card statements
- Donation receipts
- Cleared checks
- Pledge cards
Just like keeping receipts for business write-offs, hoarding paper copies of your donation records isn't actually necessary. Digital proof, like a credit card statement that says "Greenpeace," is totally fine.
However, make sure your documentation shows the following information, whether it's paper or digital:
- The organization you donated to
- Donation date
- Donation amount
Donations over certain limits have special requirements for recordkeeping. Let’s dive into those next.
For donations over $250
For donations worth over $250 you'll need a "contemporaneous written acknowledgement" from the charity you contributed to. (To count as "contemporaneous," you'll need to get this by the time you file your return.)
Basically, this is written proof from the charity. Their statement will need to include:
- The amount of money you donated (if it was a cash donation)
- A description if your donation (if it was a non-cash gift)
- An explanation of whether the charity gave you something in return
How to handle quid pro quo contributions
Sometimes, you might get a gift in exchange for your gift — say, concert tickets or a bottle of wine. In that case, the organization will have to describe what they gave you and estimate how much it's worth.
These are called quid pro quo contributions: “this for that,” meaning the donor gets something in return. For these, the IRS requires you to subtract the value of that thank-you gift from the donation you made when you claim your deduction.
For noncash donations over $500
If you make enough non-monetary gifts, you'll have to fill out Form 8283, for "Noncash Charitable Contributions."
For noncash donations over $5,000
Donated something worth over $5,000 — say, fine art or a car? You'll have to attach a qualified appraisal to your Form 8283. Section B of the form deals with these big-ticket donations.
Whether you’re donating cash, canned goods, or even antiques, your generosity makes the community stronger. Now that you know how to deduct your gifts, it can make your finances stronger too.
Keep giving back, and enjoy those tax breaks!
Sign up for Tax University
Get the tax info they should have taught us in school
At Keeper, we’re on a mission to help people overcome the complexity of taxes. That sometimes leads us to generalize in our educational content. Please email firstname.lastname@example.org if you have questions.