How to Calculate Deductions For Giving to Charity

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The Internal Revenue Service lets you write off the value of your donations to charities on your taxes if you choose to itemize your deductions. The IRS only allows a deduction for the extent to which your donations exceed anything you receive in return, so to calculate your deduction for your charitable gifts, you need to know how much the items you gave were worth and what, if anything, you received in return.

Check that the organization that you are making a donation to is a qualifying organization. The IRS has an online database (see Resources) of organizations that qualify. If the organization you donated to is not listed, you cannot take a deduction.

Calculate the amount of your donation by adding the value of each item donated. If you are making a cash donation, the value of the donation is simple to figure out. With property, the calculation can be more tricky because you have to document the fair market value of your donated goods. Some charities, such as Goodwill, publish a list of items along with their values (see Resources) so you can ask your charity for this information. If you donate an item believed to be over $5,000, you must have it valued by an appraiser.

Calculate the value of any tangible items you received in return for your donation. For example, some charities may reward donors with a T-shirt, commemorative memorabilia or other tangible items.

Subtract the value of anything you receive in return from the amount of your donation to calculate the value of your deduction. For example, if you gave $1,000 and were treated to a free donor's dinner valued at $60, you would be able to deduct $960.

Tips & Warnings

  • If you receive the right to buy tickets as a result of your donation, you can deduct 80 percent of your donation from your taxes even though the "right to buy tickets" may not have a tangible value.

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