How to Write Off Donations and Charity Gifts

You're a modern day Good Samaritan. You regularly donate clothes to the poor, stock up the food pantry, support local and foreign missions or give your used cell phones, computers or cars to the Salvation Army. Perhaps you've even traveled hundreds of miles to help the victims of a natural disaster. In return for your efforts, the Internal Revenue Service (IRS) allows you to claim charity tax deductions.

Difficulty: Moderately Easy

Instructions

1. Find out if the organization is eligible to receive tax-deductible donations as a 501(c)(3) entity. The IRS lists these qualified tax-exempt charities in Publication 78 available for downloading on its website.

2. Keep accurate written records of your contributions throughout the year. Many tax-exempt charities will provide you with a receipt of your donation, but they aren't legally required to in all situations. The burden of proof at tax time falls on your shoulders, not the organization's. In addition, you must appraise monetary or property gifts valued at $5,000 or more.

3. Maximize your charity tax credits by itemizing your deductions instead of choosing the federal and state standard deduction. Follow the directions in IRS Publication 526 carefully to learn about the specific regulations of each donation type.

4. Fill in the appropriate information on IRS Schedule A using tax preparation software or with the help of a financial adviser. Populate line 40 of Form 1040 with your total itemized charity tax credit as stated in Schedule A.

Tips & Warnings

• Consult a tax professional or the IRS if you're having trouble understanding charity tax deductions.

Resources

• Visit the IRS for a list of eligible 501(c)(3) organizations
• Go to National Association of Tax Professionals for advice
• Get more charity tax deduction information from the IRS