How to get a tax deduction for charitable donations (2024)

When you donate to charity, you're not only giving back, you could be getting back. Donating to qualified organizations can allow you to reduce your taxable income. The types and values of your donations will determine what forms you have to fill out, so it's important to know the differences.

CNBC Select reviews how charitable contribution deductions work so that you can maximize your tax break.

The IRS considers a gift or donation directly to, or for the use of, a qualified organization a charitable contribution. (You can use the Tax Exempt Organization Search tool on the IRS website to check the tax status of an organization.) Donations can be cash, but also things like clothing, electronics, furniture, art, stocks, cars and real estate.

Charitable contributions are generally tax deductible, though there can be limitations and exceptions.Eligibleitemized charitable donations made in cash, for instance,are eligible for deductionsin the year the donation was made, but arelimited to a percentage of a person's income,often 60%.

And while many major credit card issuers allow you to donate your rewards to charity, they are generally not tax deductible. With Discover cards, like the Discover it® Cash Back, for example, you can donate your rewards to partner charities like the American Cancer Society and Make-A-Wish, but the IRS views credit card rewards as discounts, not income.

Taxpayers can deduct charitable contributions by itemizing their deductions using Schedule A (Form 1040). For non-cash contributions greater than $500, the IRS requires Form 8283 to be submitted.

Online tax software can help you fill out the necessary forms. CNBC Select recommends TurboTax and H&R Block as they have a range of plans to suit a variety of needs and offer 100% accuracy guarantees.

TurboTax even has a specialized tool for charitable donations called ItsDeductible. It helps you track all of your donations throughout the year and gives fair market value of your items. Once your list is complete, you can export it directly into TurboTax.

For your charitable contribution to be eligible for a deduction, the nonprofit organization you are donating to must be registered with the IRS under section 501(c)(3). So, a gift directly to a relative or other individual will not qualify for a tax deduction. Donations to personal crowdfunding campaigns, such as through GoFundMe, also will not qualify, as they are generally considered to be personal gifts.

Qualified organizations must operate for purposes such as religious, charitable, scientific, testing for public safety, literary or educational. You can use the Tax Exempt Organization Search tool on the IRS website to check the tax status of an organization to see if your contribution is eligible for a deduction.

In addition, since the IRS expects these gifts to be made without reciprocation: If you receive something in return for your gift, such as a gala dinner or event ticket, you may only deduct the amount beyond the value of the benefit. If you contribute $100 to a charitable organization for a fundraising dinner and the value of the dinner is $60, for example, you may only deduct $40 from your taxable income. Organizations generally provide a donation receipt to inform you how much you can deduct.

When donating property, in general, you will only deduct the fair market value of your charitable contribution. The IRS provides detailed information about the contribution of property. For those donating property valued at $5,000 or greater, you must fill out Section B of Form 8283.

For those looking for some fun and more creative ways to both donate to a good cause as well as reap some tax benefits, CNBC Select has a few ideas:

• If you foster pets for a 501(c)(3) shelter or rescue group, unreimbursed expenses such as pet food, veterinary bills and transportation may be tax deductible.
• Many museums, like the American Museum of Natural History and the Museum of Modern Art, offer memberships that are tax deductible.
• You can sponsor a qualified non-profit sports team, theater group or other similar organization as long as you are making a qualified sponsorship payment. It's possible that only a portion of this would qualify as tax deductible, and these situations can vary, so it's recommended you consult a professional for specific circ*mstances.
• Since the National Park Foundation is registered as a 501(c)3 non-profit organization, donations made to support national parks can provide tax benefits.

There are a lot of nuances when it comes to filing taxes, so here are a few things to keep in mind when deducting your donations:

• Ensure that you are donating to a qualified charitable organization.
• To deduct charitable contributions, you must file Form 1040 and itemize deductions on Schedule A.
• If you receive any benefit from your donation, you must deduct only the excess of your gift subtracting the value of the benefit you received.
• When deducting any monetary gift you must also keep information that has the name of the organization, the date of the contribution and the amount of the contribution.
• If you're donating property valued at $5,000 or more, you must get a qualified appraisal.

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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every tax article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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