In an effort to encourage charitable giving, as well as relieve tax obligation for Americans, the IRS allows taxpayers to deduct amounts spent toward charities from their taxable income. However, the process of claiming these deductions can be complicated, and the IRS defines specific rules for charitable contribution tax credits. It's important to make sure that your donations qualify for a tax credit.
Determine whether your donations were made to qualifying organizations. The IRS grants tax credits for donations made to religious, charitable, educational, scientific and literary organizations. The IRS also allows credits for organizations dedicated to the prevention of cruelty to animals or children. Donations to individuals do not qualify.
Enter the amount of cash donations in line 16 of Form 1040 Schedule A. If you donated $250 or more, you must provide documented acknowledgement from the receiving organization stating the amount you gave and any rewards you received for the contribution. You must also subtract the value of any goods or services received as a reward for your donation from the amount that you donated.
Determine the fair market value (FMV) of any non cash and property donations you made. The fair market value of property is the amount that a buyer would typically pay for it on the date of the donation. Likewise, for other non-cash donations, such as clothing, the fair market value is the amount that a costumer would pay for it in its condition on the day of the contribution.
Enter the value of non-cash donations you made in line 17 of Form 1040 Schedule A. You must also provide documentation from the receiving organization if the fair market value is more than $250 for the donated items. If your non-cash donation is valued at more than $500, fill out Form 8283.
Enter donation amounts from any previous tax years that you did not claim in line 18 of Form 1040 Schedule A.
Add the figures from lines 16, 17 and 18 together and enter the sum in line 19 of Form 1040 Schedule A. This is your total tax credit for donated items.
Items you will need
- IRS Form 1040 Schedule A
- Records of Charitable Donation
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