How to Maximize your Tax Deductions on Charitable Contributions
Updated to tax year 2024.
Most donors are not motivated by tax benefits. The opportunity to save on taxes is a nice perk that those who give back can enjoy. If you itemize deductions on your federal tax return, the IRS permits you to deduct the cash value of any contributions or donations made to qualified charitable organizations.
Charitable donations are an excellent way to lower your taxable income and tax bill while giving back to your community or supporting an organization you care about. Here’s what you should know before making a charitable donation this year. Here’s everything you should know before making a charitable donation this year.
At a glance:
- You must itemize your deductions to claim the tax deduction for charitable donations.
- The amount you can deduct depends on the type of donation, up to a maximum of 60% of your adjusted gross income (AGI).
- It’s good practice to always get a donation receipt from the charity for tax planning purposes.
What counts as a charitable donation for tax purposes?
Donations of cash, checks, or other charitable gifts to qualified tax-exempt organizations can be tax-deductible. Donations of cash, checks, or other charitable gifts to qualified tax-exempt organizations can be tax-deductible. The standard deduction for single filers in tax year 2024 is $14,600 ($29,200 for those married filing jointly).
What organizations qualify for the charitable donation deduction?
To deduct your charitable donation from your taxes, your donation must go to a tax-exempt organization recognized by the IRS. If you donate to a friend or family member’s crowdfunding campaign, for example, it’s likely considered a gift rather than a donation to a qualified charity and would not be tax-deductible.
Tax-exempt organizations, also known as 501(c)(3) charitable organizations, include the following categories:
Community organizations such as Boys and Girls Clubs of America(tm)
- Educational organizations, including schools, colleges, museums, and zoos
- Religious organizations like churches, synagogues, and mosques
- Charitable organizations like Goodwill(r) and the Salvation Army(r)
- Nonprofit hospitals and medical centers
- Other tax-exempt nonprofit organizations
- You can find out if your preferred charity qualifies by running a Tax Exempt Organization Search on the IRS’s website and searching by name or employer identification number.
How much can I deduct from my taxes for charitable donations?
Generally, you can only deduct up to 60% of your AGI as charitable contributions. For example, if your AGI is $100,000 in 2024, all your deductible charitable contributions cannot exceed $60,000.
However, depending on what you donated and the type of organization you donated to, your deduction amount may be limited to 20%, 30%, or 50% of your AGI.
Tax-deductible charitable contributions take three forms:
Money
- Property (noncash)
- Expenses incurred while volunteering
- If you give cash or write a check to a charitable organization, you can generally deduct the full amount of the donation. If you receive a gift card, or a massage for free in exchange for your donation, you must subtract the value from your donation. If you donate property to non-qualifying organizations, such as private foundations, supporting organizations, or donor-advised funds your deduction can be capped anywhere from 20% to 50% of AGI. TaxAct(r), which allows you to e-file, can help. We know it can be confusing, but e-filing can be helpful. Our tax preparation software does all the heavy lifting by asking detailed questions about your charitable contributions to determine your deduction eligibility and ensure donations are reported accurately.
Can you deduct $300 in charitable contributions without itemizing?
No, you cannot deduct charitable donations for tax year 2024 if you choose not to itemize. During the pandemic, the CARES Act temporarily allowed taxpayers to claim up to $600 in deductible donations without itemizing ($300 for single filers), but this provision has since expired.
Can I claim charitable donations if I take the standard deduction?
Unfortunately, the charitable contribution deduction is only available to those with itemized deductions for 2024. If you’re unsure whether to itemize this year, check out Should I Itemize or Take the Standard Deduction?
When can you claim a deduction for a cash contribution of $250 or more?
You can write off all cash contributions of $250 or more as long as they are made to a qualifying charity and don’t exceed the IRS’s AGI limitations.
When you donate the items to charity, make sure you get a receipt or some kind of written acknowledgment from the charity for tax deduction purposes. You should get a receipt from the charity that includes the name of the charity, the date and location, and a description. For any donations over $250 (cash or not), you must also get a written acknowledgement from the organization to indicate whether they provided goods or services in exchange for your donation. If you did receive something in return, you must get a description and a good faith estimate of its value from the organization.
Can I claim a charitable deduction if I received a gift in return?
Yes, you can still deduct charitable donations in this instance,
as long as the goods or services you received in return were worth less than your donation amount.
For example, if you attend a charity silent auction and pay $10,000 for a vacation package worth $5,000, you can deduct $5,000 as a charitable donation. You should receive a written estimate of the value of the item from the organization that you donated to. This will help you to understand the value and provide proof to the IRS if they ask. A receipt is required for any property valued over $250, and anything worth more than $500 must be verified by an appraisal. Remember to consider the condition of the item when determining its value. Remember to consider the condition of the item when determining its value.
To determine the value of cars and other readily valued property, consult IRS Publication 561, Determining the Value of Donated Property.
Deducting volunteer expensesIf you incur certain expenses while volunteering for a charitable organization, you can deduct those as charitable contributions as long as the charity doesn’t reimburse you.
For instance, if you use your personal vehicle to deliver canned food to local homeless shelters, you can deduct the mileage (refer to the charitable purpose mileage rate). Likewise, if you purchased poster paper and paint to make signs for your church picnic, those expenses are deductible, assuming the church doesn’t reimburse you.
One thing that is NOT deductible is your time — the IRS doesn’t allow you to place a value on the time you spent doing volunteer work, meaning it’s non-deductible.
The bottom line
You don’t have to be a tax professional to deduct charitable donations on your federal tax return and reduce your tax liability. Take photos of your donation to support the value claim. Save any donation receipts you receive for at least three-years. Snap a picture and save it in a folder. TaxAct will take it from there! TaxAct will take it from there!
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