How to Write Off a Gift Certificate to a Non-Profit

Gift cards are tax deductible.

There are many organizations that accept gift cards as donations. These donations are tax deductible as long as the organization meets certain requirements. The IRS will allow you to write off the exact value of the gift card on your taxes using a specific schedule to itemize the deduction. The value of the gift card is not the dollar value printed on the card, but the actual amount of money left on the card at the time of gifting.

Instructions

1. Determine if the organization that you are giving the gift card to is an actual charity. A charity is approved by the IRS and given 501(C)3 distinction. Some organizations that accept gift cards for charity, such as PlasticJungle, aren't charities themselves. You can't write off gift cards donated to non-charities.

2. Look up an organization on the IRS website to determine if they are considered an exempt organization or approved as a charity, if necessary (see Resources).

3. Give the organization the gift card. Indicate the true value of the card. If the value printed on the card is $50, but there is only $26 remaining, indicate that.

4. Request a receipt, or tax deduction letter from the organization. The receipt must show the organization's name, the date and place of the contribution. It must also confirm that you gave the organization a gift card and reflect the value of the gift card.

5. Complete IRS Schedule A (Form 1040). Enter the value of the gift card in either lines 16 or 17. (Line numbers vary per tax year.)

6. Add total line items according to the Schedule A instructions. Then enter the total amount of line 40 on the IRS 1040 form. (Line numbers vary per tax year.)

References

• The New York Times: An Easy Way to Donate Unwanted Gift Cards to Schools
• SmartMoney; The Tax Perks of Charitable Giving; Bill Bischoff; Jan. 25, 2011
• TurboTax: Charitable Contributions
• GFCNS: How to Write Charity Donations Off on Taxes

Resources

• Kidney & Urology Foundation of America, Inc.: Donate Your Gift Cards -- Receive A Tax Deduction
• Kars4Kids: Your Gift Card Donation Can Make a Difference To a Child
• Works of Life: Donate Gift Cards -- Charity Gift Card Donations -- Tax Deductible
• IRS: Schedule A (Form 1040) Itemized Deductions 2010
• IRS: Search for Charities