Charitable donations usually can be deducted on Schedule A of IRS Form 1040, along with other itemized deductions. You should have the required support materials, in case your charitable deduction is questioned.
This article will provide the rules on cash contributions: donations by cash, check, electronic funds transfer, debit or credit card, or payroll deduction. Separate rules apply to non-cash donations; contact our office if you have questions about noncash contributions.
To be deductible, your gift must go to a qualified organization such as public charities, non-profit groups, and educational institutions. The IRS provides an app for investigating charitable organizations at https://apps.irs.gov/app/eos/.
You can deduct only the amount that exceeds the fair market value of any benefit you received for your contribution. That is the case if the amount you gave entitled you to merchandise or admission to an event, such as a charity dinner.
Example 1: In 2015, you gave a check for $200 to a local charity. In exchange, you received two theatre tickets worth $60 each. Your charitable deduction would be $80: the difference between your $200 outlay and the $120 value of the tickets you received.
Donations less than $250
Assuming you have contributed to an organization that is a qualified recipient, the evidence required will depend on the amount of the deduction you claim. As long as the gift is less than $250, all you will need is a bank record, such as a monthly bank or credit card statement or a canceled check. If that is not practical, you can support your deduction with a written communication from the donee organization. The letter should contain the name of the organization, the amount of the contribution, and the donation date.
For payroll contributions, the required record can be a pay stub, an IRS Form W-2, or another document from your employer showing the date and amount you gave. You also will need a pledge card or another document from or prepared for the donee organization showing the name of the organization.
Donations more than $250
For cash contributions of $250 or more, a bank record will not be enough to support the deduction. You will need a written acknowledgment, as mentioned previously, but this document must provide additional details. The acknowledgment must be received before you file your tax return or the return’s due date (including extensions), whichever comes first. If the acknowledgment does not show the date of the contribution, you also must have a bank record or receipt with the relevant date.
The acknowledgment letter also must say whether the donee organization provided any goods or services in exchange for the gift. If goods or services were provided, the letter must include a description of whatever was provided and a good faith estimate of the value of those goods or services. You can deduct the net amount.
If you made more than one $250 contribution to a particular organization during the year, you must have a separate acknowledgment for each contribution, or a single acknowledgment that lists each contribution, the date of each contribution, and the total amount of the contributions.
Calculating the contribution
When you are determining whether your contribution is $250 or more, do not combine separate contributions.
Example 2: Sarah Wilson gave her church a $20 check each week last year, for a total donation amount of $1,040 in 2015. When Sarah deducts these contributions, she does not have to combine those payments. Instead, she treats each $20 payment as a separate contribution, so the rules for contributions of $250 or more do not apply.
If you make your donations by payroll deduction, the deduction from each paycheck also is treated as a separate contribution.