Season of Giving: Maximize Deductions for Your Charitable Contributions

Taxes Charitable Contribution Deductions

Tax Deductions

The holidays are a time for family, feast, and often for giving. Feeling the holiday spirit and feel like donating to a charity? That’s great! The good news is that your contribution may be tax deductible! However, not all money you give to a charity is deductible. Charitable, financial gifts to 501(c)(3) organizations are often deductible, but it’s worth noting that not all donations can be claimed. Before we get to the list, know that generally you can deduct up to 50% of your adjusted gross income, but limitations may apply. That aside, here are a few things to know before you open your wallet hoping for a tax write-off.

Not all money you give is deductible

Perhaps the most infamous example being lottery tickets: if you attend a fundraiser event for a nonprofit and purchase a lottery ticket or raffle ticket, the cost of the ticket is not deductible.

Don’t expect to make money on a non-financial contribution

When donating goods such as real estate or a vehicle, the IRS will deduct only the fair market value from your tax liability. In other words, don’t donate a clunker car and except to be able to deduce the price of a mint vehicle.

You need to provide a record for any financial contribution

Regardless of size, the IRS will want to see a record. This could take the form of a written acknowledgment from the organization to which you donated, a bank record of a transaction, a check copy, or other type of record.

That also goes for any non-financial contribution over $250. Similarly you can submit a written acknowledgement from the recipient, or a written acknowledgement of value from a qualified third-party organization.

Image credit: aboblist.com

  • Huddleston Tax CPAs / Huddleston Tax CPAs – Shoreline, WA
    Certified Public Accountants Focused on Small Business
    18208 66th Avenue NE, Suite 102 Kenmore, WA 98028
    425-483-6600

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve: Federal Way, Des Moines, Kent, Auburn, and communities throughout WA and beyond. Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.