The Internal Revenue Service (IRS) allows taxpayers to deduct their annual cash and non-cash donations to qualified charities. Generally, taxpayers can deduct up to $250 annually without providing written itemization of their deductions for cash contributions. However, they can deduct up to $500 of non-cash contributions without providing written acknowledgment and substantiating tax forms. The IRS typically limits non-cash donations to 20 or 30 percent of a taxpayer's annually adjusted gross income.
The federal tax laws allow you to deduct cash and non-cash property, vehicles, clothing or any other type of personal or real property if you made your contributions to qualified organizations. Typically, most charities must file 501(c)(3) tax forms to receive tax-exempt treatment from the IRS. However, religious, scientific, educational and philanthropic foundations may receive tax-exempt status without filing tax forms. You cannot deduct charitable donations to private individuals or political campaigns. Finally, you must itemize your tax returns to deduct charitable donations. If you take the standard deduction, you cannot deduct your donations.
If you donate clothing after 2006, your clothing must be in at least good condition. You can deduct up to $500 of personal or real property without having to complete IRS Form 8283, Non-cash Charitable Contributions. If you have to complete Form 8283, you must attach it to your Schedule A of IRS Form 1040.
If you claim a deduction for more than $500 annually in non-cash vehicle donations, you must obtain a written receipt or acknowledgment from the charitable tax-exempt organization substantiating your donation. If you claim a deduction of more than $500 for a non-vehicle donation, you must complete IRS Form 8283 with your tax returns. If you deduct more than $5,000, you must obtain additional proof of your donation.
For charitable donations exceeding $5,000, you must obtain a certified appraisal from a professional appraiser if you deduct more than $5,000 annually. If your deduction exceeds $5,000, your written appraisal must include the appraiser's valuation method to arrive at determining the fair market value of your donation.
Carry Forward Rules
Your annual gross income is your total income from all sources. Your gross income includes employment income, tips, commissions, rents and other royalties. Unless specifically excluded by the Internal Revenue Code, your gross income is the total of all of your earnings. Your annual deduction is limited to 20 percent of your adjusted gross income. If you exceed the deduction limit, you may be able to use the special carry forward rules allowing you to take any remaining nondeductible charitable donations in subsequent years.