You may donate money or property to a charity.
Before you donate money or goods, research the charity. Be certain that the charity is real. Several agencies offer information to help you evaluate the operation of charities:
- The Internal Revenue Service offers tax tips for donors.
- Check a charity's 501(c)3 status with the IRS' exempt organization database. A charity must have 501(c)3 status if you plan to deduct your donation on your federal taxes.
- The attorney general in your state often licenses charitable organizations. They may also have records of complaints about charities.
- The Better Business Bureau offers reports about large charities and how they use their funds.
Types of Donations
Make financial donations by check or credit card. These payment methods can help you keep record of your donations. They can also protect you from charity scams.
Goods and Personal Property
Some charities accept non-cash donations, such as clothing and household items. Donate items that are in good (or better) condition. Keep a list of the items you donated, for your taxes.
You can donate your car, truck, boat, or other vehicle to a charity. An organization may give a donated vehicle to someone, use it for operations, or sell it at auction. If you donate a vehicle, you will need to transfer the title of the to the charity. Also, remove license plates and registration documents before you donate the car.
You may also give other types of items to charities:
- Real Estate
The value of these items may need an expert appraisal. The values could depend on offers to buy the items and the timing of the donation.
Some scammers set up fake organizations, to take advantage of the public’s generosity. They especially take advantage of tragedies and disasters.
Report Charity Scams
The Do Not Call Registry doesn’t apply to charities. But you can ask an organization not to contact you again.
How to Protect Yourself
Follow these tips to help you detect common charity scam tactics:
Don’t give in to high pressure tactics such as urging you to donate immediately.
Don’t assume that you can get a tax deduction for donating to an organization. Use the IRS’s database of 501(c)3 organizations to find out if it has this status.
Don’t send cash. Pay with a check or credit card.
Federal Tax Deductions for Charitable Donations
You may be able to claim a deduction on your federal taxes if you donated to a 501(c)3 organization. To deduct donations, you must file a Schedule A with your tax form. With proper documentation, you can claim vehicle or cash donations. Or, if you want to deduct a non-cash donation, you'll also have to fill out a Form 8283.
How Much Can You Deduct?
The amount of money that you can deduct on your taxes may not be equal to the total amount of your donations.
Keep Records of Charitable Donations
To claim deductions, it’s important to keep records of your donations to charities. You may not have to send these documents with your tax returns, but they are good to keep with your other tax records. Common documents include:
Federal Tax Deductions for Small Business Charitable Donations
Small businesses and individuals generally have the same requirements when filing to receive a tax deduction for charitable giving. But, there are some important issues companies should know about.
- Donated services are not deductible. Out-of-pocket expenses related to the donation, like travel or materials, may be deductible.
- Donated non-food inventory must be reported according to specific requirements. These requirements are different than those for donated vehicles.
- Donated food must be reported according to specific requirements.
- Donated intellectual property must be reported according to specific requirements.
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Last Updated: January 22, 2020