We all know that giving to charity is both personally satisfying, in that it allows us to give to the causes we support, as well as financially satisfying, when we fill out our taxes and collect on deductions.
And that’s great, but what is a charitable contribution?
According to the IRS, “a charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value.”
The IRS states that “qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals.” Qualified organizations have 501(c)3 status. Whether or not an individual organization is qualified can be found using the IRS Exempt Organizations Select Check tool.
Charitable contributions are not tax deductible for certain organizations. For instance, donations to sports clubs and chambers of commerce are not deductible. Neither are donations to political candidates or labor unions.
Though many people think of charitable contributions as simply consisting of cash, contributions are far from limited to money. Items such as clothing, jewelry and cars are tax deductible to varying degrees when donated. It is important to note that not all noncash contributions are accepted as tax deductible. For instance, service costs cannot be deducted, and blood donated to a blood bank or blood drive cannot be donated for monetary value.
Volunteer work is not deductible. However, costs directly resulting from volunteer work are deductible. For instance, the cost of gasoline used while travelling to and from volunteer work can be deducted.
There is a variety of paperwork which must be filled out in the process of claiming a deduction from a charitable donation. This paperwork depends on the size and nature of the donation. For example, to receive a deduction on any donation of $250 or more, cash or noncash, a receipt is required. Any noncash donation worth $500 or more means filling out IRS form 8383.
The most important thing about charitable contributions, however, won’t be found in tax codes or deductions. It will be found in the satisfying reward of giving time, money, possessions and effort to fight for a cause that you believe in. That’s something to which no monetary value can be assigned.
– Andrew Michaels
Sources: TurboTax Blog, IRS, IRS,
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