Tax season ends on April 15, and if you made any in donations last year, you may be eligible for tax deductions. Before filing your taxes, read our list of common tax-deductible donations to see if you qualify.
1. Clothing donation
Cleaning out your closets and donating used clothes to your local Salvation Army not only frees up space in your home but it may also qualify you for a clothing-donation tax deduction. Bear in mind that you will need to know the fair market value of your donated clothes and get a printed or handwritten receipt to file for a deduction.
2. Monetary donations to a public charity
Public charities receive most of their funding from the government and the general public. Aside from churches and hospitals, other examples of public organizations include the American Cancer Society, Inc. and the American Heart Association.
Deductions to public charities are limited by up to 50% of the donor’s adjusted gross income (AGI). For example, if your AGI is $100,000, you may only deduct $50,000 or less. Not all charity donations are deductible. To find out if an organization is exempt from receiving tax-deductible contributions, use the IRS tax-exempt organization tool.
3. Monetary donations to a private foundation
A private organization, on the other hand, is usually funded by one major source, such as gifts from one family or corporation. Examples include the Bill & Melinda Gates Foundation and the Ford Foundation.
Cash donations to private charities are deductible up to 30% of the donor’s adjusted gross income — less generous compared with public organizations.
4. Contributions to charities
In addition to monetary donations, contributions to qualifying charities are also tax deductible. For guidelines on what constitutes a qualifying organization, see the IRS publication on charitable contributions.
5. Car donation
Donating your vehicle to a charity is another great way to reduce your taxable income. The amount of your tax deduction is dependent on the sale price of the vehicle. For instance, if the fair market value of your car is $5,000, but the charity sells it for only $2,000, your deduction cannot exceed $2,000. You must also receive written acknowledgement of the donation from the non-profit in order to claim a deduction.
Donating to charity not only makes you feel good and supports the community; it’s also a great way to take advantage of money-saving tax breaks! Remember: always get a receipt when you make a tax deductible donation. Check out our tax preparation checklist for other ways you can prepare for tax season.
Federal income tax laws are complex and subject to change. The information in this brochure is based on current interpretations of the law and is not guaranteed. Neither the company nor its representatives gives legal or tax advice. You should consult your attorney or tax adviser for answers to your specific tax questions.