- To claim a charitable contribution deduction you must itemize your deductions. So, if you claim the standard deduction, making one final donation to your child's school will not save you any taxes. But, if you itemize your deductions, you could save some tax money if you make a quick year-end donation of property, such as books or athletic gear or anything else you can donate.
- To qualify for a tax deduction, you must donate money or property to a "qualifying organization." A qualifying organization is generally defined as a nonprofit entity that serves a religious, educational, charitable, scientific or literary purpose. For example, thrift stores such as Goodwill, Deseret Industries and the Salvation Army are considered qualifying organization. So too are public and private schools, including private institutes of higher education.
- The amount of your tax deduction depends on the fair market value of the property you donate. For money, this is easy. If you donate $100 then you claim $100 in deductions. For property, such as a car or clothing or books, this can be a little more difficult to calculate. Generally, fair market value is the amount of money that you could get if you sold the property on the open market. For example, if you sold the book on ebay, how much would it sell for? That is the amount you can claim as a deduction.
- You can only claim a deduction if your donation truly is a donation. In other words, you can't make a "donation" if you are receiving some personal benefit in exchange for the supposed "donation." Let's say, for example, you donate $100 to a charitable cause, and in exchange the charity gives you a $40 gift card to a local restaurant. You can claim a tax deduction for only $60--$100 contribution less the $40 personal benefit to you).
- You can only claim a charitable contribution deduction if you have a written receipt from the qualifying organization you donated to. The receipt should list the type of property you donated, the date of the donation, and the estimated fair market value of the property. You should always have somebody from the qualifying organization sign the receipt, and then you must keep that receipt in your tax files in case you ever get audited by the IRS.
