Are All Donations Deductible on Federal Income Taxes?

by Gregory Hamel
Blood donations are not tax-deductible.

Blood donations are not tax-deductible.

Keith Brofsky/Photodisc/Getty Images

Donating cash or property is a way to support causes you believe in and can also grant you a deduction on your income tax return. Charitable giving is considered an "itemized deduction"; you have forgo claiming your standard deduction if you want to claim your itemized deductions. Even if you choose to itemize your deductions, not all donations are tax-deductible.

Qualifying Charities

A donation is only tax-deductible if it is made to a charity that qualifies to receive tax-deductible gifts. According to the Internal Revenue Service, there are five types of charities that qualify: nonprofit organizations that operate only for religious, charitable, literary, scientific educational or literary purposes; war veterans organizations; domestic fraternal societies; nonprofit cemeteries and government organizations. You can't deduct donations to social clubs, political organizations, labor unions and most foreign organizations. In addition, you can't deduct donations you make for the benefit of a specific individual. You can check on the eligibility of the charity on the IRS website (see Resources).

Contributions With Personal Benefits

If you receive something of value when you make a donation, you can’t deduct the full amount of the gift. Instead, you have to reduce your deduction by the fair market value of the goods or services you receive. For example, if you pay $100 to attend a charity dinner and you receive a meal that is worth $30, your deduction is limited to $70.

Time and Services

Time and services you provide to charitable organizations are not tax-deductible. For instance, if you volunteer your time at church or a local animal shelter, you can't take a deduction based on the time you spend volunteering. You can, however, deduct expenses you incur to provide volunteer services, like the cost of driving to a charity to volunteer, which you claim at a rate of 14 cents a mile. Donations of blood to the Red Cross or other blood banks are not deductible.

Annual Limits

The deduction for charitable giving is limited to 50 percent of your adjusted gross income for the year. A 30 percent limit applies to donations of capital gain property. Capital gain property describes assets that have increased in value over time, like stocks or real estate. The 30 percent limit also applies to veterans organizations, fraternal societies, nonprofit cemeteries, and certain private nonoperating foundations. If your donations exceed the annual limit, you can carry over and deduct the excess in each of the next five years until it is used up.

Fair Market Value

Donations of property are tax-deductible up to the fair market value of the property. Fair market value is the amount property would sell for on the open market, such as the amount used goods fetch at thrift stores. Items that are out of style or in poor condition may have little or no market value. For instance, items like household goods and used clothes generally need to be in good usable condition to have value and qualify for a tax deduction. Industry valuation guides can be used to estimate the fair market value of vehicles like cars and boats. You have to get an appraisal to deduct donations of most types of property worth more than $5,000, other than vehicles, such as art, jewelry, gems, land, buildings and electronics.

About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

Photo Credits

  • Keith Brofsky/Photodisc/Getty Images