Chapter 14

Charitable Contribution Deductions

By making deductible donations, you help your favorite philanthropy and at the same time receive a tax benefit. For example, if you are in the 25% tax bracket, a donation of $1,000 reduces your taxes by $250.

For cash donations of any amount, your deduction will be disallowed if you do not have a cancelled check or account statement, or a written receipt from the charity, to substantiate your contribution.

For donations of $250 or more, you must receive a written acknowledgement from the organization that indicates whether you received goods or services in return for your donation. A cancelled check is not sufficient evidence for a cash donation of $250 or more (14.14).

If you claim deductions for property valued at more than $500, you also must attach Form 8283 to Form 1040. If the value you claimed exceeds $5,000, you generally must obtain a written appraisal (14.15).

If you donated a car (or other vehicle) valued at over $500, you also must attach Copy B of Form 1098-C to your return. Your deduction is generally limited to the gross sales proceeds received by the charity on a sale of the vehicle, even if you could substantiate a higher fair market value (14.7).

There are deduction ceilings depending on the type of donation and the nature of the charity, and an annual ceiling based on adjusted gross income (14.17).

14.1 Deductible Contributions

14.2 Nondeductible Contributions

14.3 Contributions That Provide You With Benefits

14.4 Unreimbursed Expenses of Volunteer Workers

14.5 Support of a Student in Your Home

14.6 What Kind of Property Are You Donating?

14.7 Cars, Clothing, and Other Property Valued Below Cost

14.8 Bargain Sales of Appreciated Property

14.9 Art Objects

14.10 Interests in Real Estate

14.11 Life Insurance

14.12 Business Inventory

14.13 Donations Through Trusts

14.14 Records Needed To Substantiate Your Contributions

14.15 Form 8283 and Written Appraisal Requirements for Property Donations

14.16 Penalty for Substantial Overvaluation of Property

14.17 Ceiling on Charitable Contributions

14.18 Carryover for Excess Donations

14.19 Election To Reduce Fair Market Value by Appreciation