Charitable Donations

A charitable donation is a contribution of money or goods to a tax-exempt organization, such as a charity, that can reduce your taxable income.

Yes. In general, you can deduct up to 60% of your adjusted gross income via charitable donations. The limit applies to all donations you make throughout the year, no matter how many organizations you donate to. Contributions that exceed the limit can often be deducted on your tax returns over the next five years — or until they’re gone — through a process called a carryover.

Tax deductible donations must meet certain guidelines, or you won’t get the extra cash to accompany your good deed.

1. Donate to a qualifying organization

Your charitable giving will qualify for a tax deduction only if it goes to a tax-exempt organization, as defined by section 501(c)(3) of the Internal Revenue Code. Examples of qualified institutions include religious organizations and nonprofit educational agencies.

2. Document your charitable contributions

Keep track of your tax deductible donations, no matter the amount. If you made a monetary contribution, qualifying documentation includes a bank statement, a credit card statement and a receipt from the charity (including date, amount and name of the organization) or a canceled check.

3. Don’t miss out on tax deductions for volunteering

IRS rules don’t let you deduct the value of your time or service, but expenses related to volunteering for a qualified organization can be counted as tax-deductible donations.

• Expenses must be directly and solely connected to the volunteer work you did; not previously reimbursed; and not personal, living, or family expenses.
• Your tax-deductible donations can include mileage you drive to charitable events and volunteer opportunities, or mileage you used to bring items to a donation site.
• You can either deduct your actual expenses using receipts for gas and similar costs, or you can take the standard mileage deduction.