How to Calculate Donation Credits for Taxes
The IRS allows taxpayers the option of deducting charitable donations from their taxable income to reduce their tax bill. The charitable donations tax deduction is an itemized deduction, which means you must forgo the standard deduction in order to claim it on your taxes. When calculating how much of a deduction you can take for your donations, you need to know the amount of your donation, either how much money you donated or how much your non-cash property was worth, and what you received in return for the donation.
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Instructions
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Determine whether the organization you made your contribution is a qualified organization by IRS standards. Organizations are non-profits such as religious groups, educational organizations and scientific foundations. You can look on the IRS's database (see Resources) or call (877) 829-5500 to confirm whether a group that you are considering donating to is qualified.
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2
Determine the value of your donation. If it is a cash donation, use the amount you donated. If it is a property donation, it can be more difficult to figure out. You should consider the condition of your property and what similar items are being sold for. If you donate a car and the charity sells it before using it, your donation is valued at the price that the car is sold for. If you claim that your property donation is valued at more than $5,000, you must get the item officially appraised.
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3
Determine what, if anything, you received in return for your donation. For many donations you may receive a T-shirt, mug or similar thank-you gift. You must subtract the value of the gift from the amount of your donation. For example, if you received a mug valued at $15 in exchange for your $200 donation, you could take a deduction of $185. If your donation allows you the right to purchase athletic tickets, you may deduct 80 percent of your donation. For example, if you donated $500 to your college and in return you got the right to purchase tickets to the football games, you could deduct $400. However, if you receive tickets, you must subtract the value of the tickets and then take a deduction equal to 80 percent of the remainder. For example, if your $500 donation got you two tickets with a fair market value of $200, you would subtract the $200 and then take 80 percent of the remaining $300, which is $240.
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Subtract the value of anything you received in return for your donation, found in Step 2, from the value of your donation, found in Step 2, to calculate the charitable donations tax deduction you are eligible to take on your taxes.
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