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Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.
Updated July 25, 2024 Reviewed by Reviewed by Lea D. UraduLea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.
Fact checked by Fact checked by Katrina MunichielloKatrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.
Part of the Series Tax Deductions and Credits GuideUnderstanding Tax Breaks
Tax Credits for Parents/Students/Dependents
Tax Deductions for Real Estate
Tax Deductions for Retirement Savings
A charitable donation is a gift in the form of cash or property that is given to a nonprofit organization in order to assist it in reaching its goals. The donor must receive nothing of value in return for the gift.
Charitable donations or contributions are potentially a tax-saving opportunity. Not only does the charity benefit, but taxpayers enjoy tax savings by deducting part or all of their contributions on their tax returns if they itemize their deductions using Schedule A of Form 1040.
Charitable contribution deductions for cash contributions to public charities and operating foundations are limited to up to 60% of a taxpayer's adjusted gross income (AGI).
Tax law requires that deductions are allowed only for contributions that serve a charitable purpose. A recipient organization must qualify for tax-exempt status as required by the tax code and determined by the Internal Revenue Service (IRS).
Qualified organizations include those that operate for religious, charitable, scientific, literary, or educational purposes and the prevention of cruelty to animals or children. Donations to nonprofit veterans’ organizations, fraternal lodge groups, cemetery and burial companies, and certain legal corporations may also apply.
The IRS Tax Exempt Organization Search tool can verify an organization’s tax-exempt status and determine its eligibility for deductible contributions.
"Quid pro quo” donations are those for which the donor receives an economic benefit such as goods or services in return for the gift. Let's say a donor receives a T-shirt in return for a donation. Their deduction is limited to the amount of the contribution that exceeds the fair market value (FMV) of the shirt. In this case, the deductible amount is $20 if the contribution is $40 and the FMV of the T-shirt is $20.
Charitable contribution deductions are allowed for donations of goods such as clothes and household items to Goodwill, the Salvation Army, and similar charities. Used clothing and household items must be in usable, good condition and the deduction amount is limited to an item’s fair market value at the time of contribution.
Special rules apply to vehicle donations. If the fair market value of a vehicle is more than $500, taxpayers can deduct the lesser of:
If the qualified donee sells the vehicle for $500 or less, a taxpayer can deduct the lesser of:
A taxpayer must file IRS Form 8283 with their tax return when they claim more than $500 in total deductions for non-cash contributions. Some tax preparation software packages include calculators to help determine the fair market value of various items. IRS Publication 561 is a useful resource to help determine the value of non-cash contributions.
The total deductions are capped at 20% to 50% of a taxpayer’s AGI for non-cash contributions and gifts to non-qualifying organizations, including private non-operating foundations, supporting organizations, donor-advised funds, and other charitable organizations that do not qualify as public charities.
Non-cash contributions to qualifying organizations like public charities and operating foundations are capped at 50% of the individual donor’s AGI. Contributions of appreciated capital gain property are generally capped at 30% of the AGI if they're made to qualifying organizations and 20% of the AGI in the case of non-qualifying organizations.
Taxpayers can choose to itemize their deductions, which is required when taking a charitable contribution deduction, or take the standard deduction when filing their tax returns. The standard deductions for 2023 and 2024 are:
| 2023 Tax Year | 2024 Tax Year | |
| Single Taxpayers and Married Individuals Filing Separately | $13,850 | $14,600 |
| Married Couples Filing Jointly | $27,700 | $29,200 |
| Heads of Household | $20,800 | $21,900 |
Taxpayers are usually better off claiming the standard deduction for their filing status if it's more than the total amount of all their itemized deductible expenses for the year. They'd otherwise be paying taxes on more income than they have to because they can't itemize and claim the standard deduction as well. It's an either/or decision.
Taxpayers must keep detailed records to substantiate their charitable deductions. The type of record depends on the type and amount of the contribution: cash, non-cash, and out-of-pocket expenses while donating services.
Cash contributions include donations made by cash, check, electronic funds transfer, online payment services, debit cards, credit cards, payroll deduction, or a transfer of a gift card that can be redeemed for cash. The documentation required includes:
Cash contributions over $250 require a written acknowledgment from the charity that includes the amount, whether the organization gave any goods or services to the donor with the contribution, and an estimate of the value of any such goods or services.
Individuals, partnerships, and corporations must include Form 8283 when they're filing tax returns. This form reports information about noncash charitable contributions when the deduction for all noncash gifts is over $500.
No. According to the IRS, taxpayers can only deduct charitable contributions if they itemize their deductions using Schedule A of IRS Form 1040.
An organization that operates for charitable, religious, scientific, literary, or educational purposes, or to prevent cruelty to children or animals is commonly regarded as a qualified organization, according to the IRS.
Charitable contributions must be claimed as itemized deductions on Schedule A of IRS Form 1040. The limit on charitable cash contributions is 60% of the taxpayer's adjusted gross income for tax years 2023 and 2024. The IRS allows deductions for cash and noncash donations based on annual rules and guidelines.
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Description Part of the Series Tax Deductions and Credits GuideUnderstanding Tax Breaks
Tax Credits for Parents/Students/Dependents
Tax Deductions for Real Estate
Tax Deductions for Retirement Savings
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A donor-advised fund is a private charitable account created to manage and distribute donations on behalf of an organization, family, or individual.
Cash for Clunkers was a federal program that gave owners a way to dispose of old vehicles in exchange for more fuel-efficient cars.
The Smith Maneuver is a Canadian tax strategy that makes interest on a residential mortgage tax-deductible. Borrowers need a readvanceable mortgage to use it.
The general business credit is the total value of the separate business tax credits a business claims on its tax return for a specific year.
Business expenses are costs incurred in the ordinary course of business. Business expenses are tax-deductible and are always netted against business income.
A widow(er)'s exemption is one of several forms of state or federal tax relief available to a surviving spouse in the period following their spouse's death.
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