How to Deduct Christmas Gifts From Taxes

Only gifts to qualified charities can be deducted from your taxes.

Donating Christmas gifts could be a way to lower your taxes while helping others. Only gifts to qualified charities can be considered for a tax deduction. Gifts to friends and family members cannot be deducted. Qualified charities are all churches, schools and hospitals as well as any organization that operates for charitable, religious or education purposes. You can deduct the fair market value of your Christmas gifts to charity as an itemized deduction on your tax return.

Instructions

1. Contact the organization that you are considering donating gifts to and confirm if it is a qualified charity. Ask if the charity will properly document your charitable donations.

2. Document the fair market value of your gifts. For new presents, keep the receipts of your purchases. For donations of used goods, ask the charity for an approximation of the gift value. Consider searching online auction websites to get a estimated value of your used gifts.

3. Ask the charity for a receipt confirming the value of your gifts. A receipt is not required for donations under $250, but getting a record of your gift is always a good idea.

4. Add up the value of all your charitable contributions over the year, including your charitable Christmas gifts.

5. Multiply your annual adjusted gross income by 50 percent. This is the maximum you may deduct from your taxes per year for charitable contributions.

6. Reduce your adjusted gross income by the value of your charitable contributions. If you donations exceed 50 percent of your adjusted gross income, you can carry the deduction forward to future tax returns.

References

• IRS.gov Eight Tips for Deducting Charitable Contributions
• IRS.gov: Publication 526 (2010), Charitable Contributions