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Taxpayers who give money or goods to a charity may be able to claim a deduction on their 2017 federal tax return, which basically reduces the amount of their taxable income. Here are some important facts about charitable donations:

Qualified charities. To receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, use the IRS Select Check tool. Here are examples of things that taxpayers can’t deduct:

  • Gifts to individuals
  • Donations to political organizations and candidates

Itemize deductions. To deduct donations, taxpayers must file Form 1040 and itemize deductions using Schedule A.

Benefit in return. Taxpayers can only deduct the amount of their donation that exceeds the fair market value of the benefit received. If taxpayers get something in return for their donation, they may have to reduce their deduction. Examples of benefits include merchandise, meals, and tickets to events.

Property donation. If taxpayers give property instead of cash, they can normally only deduct the item’s fair market value. Fair market value is generally the price they’d get for the property on the open market. Used clothing and household items donated must generally be in good condition or better. Special rules apply to cars, boats and other types of property donations.

Proof of Donation. If taxpayers donated cash or goods of $250 or more, they must have a written statement from the charity. The statement must show:

  • Amount of the donation.
  • Description of any property given.
  • Whether the donor received any goods or services in exchange for the gift.  
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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