Donation Tax Deduction

The federal government offers individuals the opportunity to deduct gifts to charitable organizations. To deduct the value of the deduction you must itemize your deductions, so you cannot deduct the value of your donations if you take the standard deduction.

Valuing your Deduction

The amount of the deduction you can take is the total value of your donation minus any tangible items you might have received in return. If you donated $15,000 to your school and in return received a weekend at an area hotel valued at $500 as a thank you, you would only be able to deduct $14,500.

Deduction Limits

Deductions are limited to 50 percent of your adjusted gross income for monetary donations, 30 percent for goods and property donations, and 20 percent for items on which you would have had to pay capital gains taxes if they had not been donated.

Deduction Carryovers

If your donations are greater than the percentage allowed, you can carry over any excess to later tax years up to five years after the donation was made. For example, if your income was $30,000 and you made a donation of $20,000 to your church, you could deduct $15,000 this year and $5,000 in the next year.

Receipts

If you donate more then $250 worth of cash or goods, you must have a receipt from the organization stating the amount of money or value of goods you gave, the date you gave them and any tangible goods you received in return.

Assessments

Any donation of property or land of more than $5,000 must have a formal assessment to certify the value of the donation to ensure you do not overvalue your donation.

References

• IRS Charitable Contribution Rules