Are All End-of-Year Donations Tax Deductible?

Now that the holiday season is over and tax season is upon us, you may be wondering if your end-of-year gifts and donations can be deducted from your upcoming tax returns. In general, the answer is…it depends. Here are a few more specific answers to commonly asked questions about end-of-year donations.

How can I tell if my donation is tax deductible?

The IRS only allows you to take a deduction if the donation is to a qualified charity. To simplify the process, the IRS website offers an “Exempt Organization Select Check” tool that contains a database of organizations eligible to receive tax deductible charitable donations. A “qualified charity” is one that has been granted tax exempt status by the IRS.

Do I need a receipt for a monetary donation?

Yes and no. For monetary donations of $250 or less, you only need a bank record (canceled check, bank or credit card statement) as proof. For monetary donations over $250, you’ll need a receipt from the charitable organization that includes the date, amount of the donation, and whether you received any goods or services in return for your donation.

I volunteer at a shelter for 5 hours per week, can I deduct the value of my time and services?

No. However, you can deduct expenses incurred by your service. For example, if you travel 20 miles each way to get to and from the shelter, you can deduct the cost of fuel or a standard mileage deduction for travel-related expenses.

Can I deduct donations and gifts made to a family member?

No. You can only deduct gifts to qualified charitable organizations.

Can I deduct donations to my alma mater?

Yes. If you donate money to a university or college, you can deduct the amount of your gift. However, if your donation is used to buy access or actual tickets to events, different rules apply. If your donation provides access to tickets, you can only deduct 80% of the value of your donation. For example, if you donate $1,000 to gain priority ticket access, you can only deduct $800. On the other hand, if your donation goes towards the purchase of tickets, you must subtract the value of the tickets from your donation. For example, if you donate $1,000 in exchange for tickets worth $250, you can only deduct $750 of your donation.

Are donations of clothing and household items tax deductible?

Yes. You can deduct the fair market value of goods including clothing, household items, furniture, computers, etc. However, make sure you donate it to a charity from which you can get a receipt. Do not just dump your donations into a bin and drive away.

While most people don’t make charitable donations solely for the tax benefit, it is in your best interest to be aware of these benefits. Feel free to contact us if you have any questions about gifts and donations as you prepare your tax returns.