You’ve probably heard about a donation tax relief or tax-deductible donations. Well, these are merely gifts of cash, assets or property made to a qualifying organization. What this simply means is that you won’t receive anything in return for your gift.
The amount you donate can then be itemized on your tax return and will help reduce your taxable income. If you donated on asset or property, you can deduct the current fair market value in your tax return.
That being said, the following are the most common types of tax-deductible charitable donations that qualify in the eyes of the IRS.
Cash Donations
You are allowed to donate cash, whether it’s mailing a check or paying using your credit card. Other notable types of cash donation include payroll deductions, automatic withdrawals from your bank account and even using your debit card.
To claim the donation tax relief, you should verify whether it counts as a qualifying organization in the eyes of the IRS, and they’re in a position to offer you proof you made a donation. Also, you should be able to get a receipt or invoice outlining the date and amount you donated and other relevant information about the nonprofit organization such as their tax ID number.
Items
Items are essentially viewed at as noncash donations and typically include household goods, used clothing or new toys. You will have to donate items in good, used condition and the charity or nonprofit should accept them in order for it to count as a charitable donation.
The charitable organization will offer you a receipt of their fair market value, though you may have to be the one to offer these values. You can factor in the average prices of the items you’ve donated, or some charities offer guidance to help establish the fair market value.
The Bottom Line
The above are merely some of the common types of donations that qualify for tax relief. Others include appreciated property, noncash donations, and out-of-pockets expenses for volunteer work.
Remember, donations to certain organizations are considered not tax-deductible. These include political affiliations such as political party, political candidate and Political Action Committees (PACs). Other donations that are generally not tax-deductible include your volunteer hours, donations to business leagues, labor unions, fraternities and sororities. Be sure to do your homework before deciding on anything.
