24.   Contributions

Table of Contents

Introduction

This chapter explains how to claim a deduction for your charitable contributions. It discusses the following topics.

  • The types of organizations to which you can make deductible charitable contributions.

  • The types of contributions you can deduct.

  • How much you can deduct.

  • What records you must keep.

  • How to report your charitable contributions.

A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value.

Form 1040 required.    To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. The amount of your deduction may be limited if certain rules and limits explained in this chapter apply to you. The limits are explained in detail in Publication 526.

Useful Items - You may want to see:

Publication

  • 526 Charitable Contributions

  • 561 Determining the Value of Donated Property

Form (and Instructions)

  • Schedule A (Form 1040) Itemized Deductions

  • 8283 Noncash Charitable Contributions

Organizations That Qualify To Receive Deductible Contributions

You can deduct your contributions only if you make them to a qualified organization. Most organizations other than churches and governments must apply to the IRS to become a qualified organization.

How to check whether an organization can receive deductible charitable contributions.   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Or go to IRS.gov. Click on “Tools” and then on “Exempt Organizations Select Check” (www.irs.gov/charities). This online tool will enable you to search for qualified organizations. You can also call the IRS to find out if an organization is qualified. Call 1-877-829-5500. People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www.gsa.gov/fedrelay.

Types of Qualified Organizations

Generally, only the following types of organizations can be qualified organizations.

  1. A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Certain organizations that foster national or international amateur sports competition also qualify.

  2. War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico).

  3. Domestic fraternal societies, orders, and associations operating under the lodge system. (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.)

  4. Certain nonprofit cemetery companies or corporations. (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt.)

  5. The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. (Your contribution to this type of organization is only deductible if it is to be used solely for public purposes.)

Examples.    The following list gives some examples of qualified organizations.

  • Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.

  • Most nonprofit charitable organizations such as the American Red Cross and the United Way.

  • Most nonprofit educational organizations, including the Boy (and Girl) Scouts of America, colleges, and museums. This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct .

  • Nonprofit hospitals and medical research organizations.

  • Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs.

  • Nonprofit volunteer fire companies.

  • Nonprofit organizations that develop and maintain public parks and recreation facilities.

  • Civil defense organizations.

Certain foreign charitable organizations.   Under income tax treaties with Canada, Israel, and Mexico, you may be able to deduct contributions to certain Canadian, Israeli, or Mexican charitable organizations. Generally, you must have income from sources in that country. For additional information on the deduction of contributions to Canadian charities, see Publication 597, Information on the United States–Canada Income Tax Treaty. If you need more information on how to figure your contribution to Mexican and Israeli charities, see Publication 526.

Contributions You Can Deduct

Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. The contributions must be made to a qualified organization and not set aside for use by a specific person.

If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. See Contributions of Property , later in this chapter.

Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. See Limits on Deductions , later.

Table 24-1 gives examples of contributions you can and cannot deduct.

Contributions From Which You Benefit

If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Also, see Contributions From Which You Benefit under Contributions You Cannot Deduct, later.

If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. For the excess amount to qualify, you must pay it with the intent to make a charitable contribution.

Example 1.

You pay $65 for a ticket to a dinner-dance at a church. Your entire $65 payment goes to the church. The ticket to the dinner-dance has a fair market value of $25. When you buy your ticket, you know that its value is less than your payment. To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). You can deduct $40 as a contribution to the church.

Example 2.

At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. The amount you pay is no more than the fair rental value. You have not made a deductible charitable contribution.

Athletic events.   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution.

  If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Subtract the price of the tickets from your payment. You can deduct 80% of the remaining amount as a charitable contribution.

Example 1.

You pay $300 a year for membership in an athletic scholarship program maintained by a university. The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. You can deduct $240 (80% of $300) as a charitable contribution.

Table 24-1. Examples of Charitable Contributions—A Quick Check

Use the following lists for a quick check of whether you can deduct a contribution. See the rest of this chapter for more information and additional rules and limits that may apply.
Deductible As 
Charitable Contributions 		Not Deductible 
As Charitable Contributions
Money or property you give to: 

  • Churches, synagogues, temples, mosques, and other religious organizations

  • Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park)

  • Nonprofit schools and hospitals

  • The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc.

  • War veterans groups

 
 
Expenses paid for a student living with you, sponsored by a qualified organization 
 
Out-of-pocket expenses when you serve a qualified organization as a volunteer 		Money or property you give to: 

  • Civic leagues, social and sports clubs, labor unions, and chambers of commerce

  • Foreign organizations (except certain Canadian, Israeli, and Mexican charities)

  • Groups that are run for personal profit

  • Groups whose purpose is to lobby for law changes

  • Homeowners' associations

  • Individuals

  • Political groups or candidates for public office

 
 
Cost of raffle, bingo, or lottery tickets 
 
Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups 
 
Tuition 
 
Value of your time or services 
 
Value of blood given to a blood bank
  

Example 2.

The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. You must subtract the usual price of a ticket ($120) from your $300 payment. The result is $180. Your deductible charitable contribution is $144 (80% of $180).

Charity benefit events.   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive.

  If there is an established charge for the event, that charge is the value of your benefit. If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Whether you use the tickets or other privileges has no effect on the amount you can deduct. However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket.

  
Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount.

Example.

You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Printed on the ticket is “Contribution—$40.” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price).

Membership fees or dues.    You may be able to deduct membership fees or dues you pay to a qualified organization. However, you can deduct only the amount that is more than the value of the benefits you receive.

   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. They are not qualified organizations.

Certain membership benefits can be disregarded.   Both you and the organization can disregard the following membership benefits if you receive them in return for an annual payment of $75 or less.

  1. Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as:

    1. Free or discounted admission to the organization's facilities or events,

    2. Free or discounted parking,

    3. Preferred access to goods or services, and

    4. Discounts on the purchase of goods and services.

  2. Admission, while you are a member, to events open only to members of the organization, if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $9.90.

Token items.   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true.

  • You receive only a small item or other benefit of token value.

  • The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full.

Written statement.   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. The statement must say that you can deduct only the amount of your payment that is more than the value of the goods or services you received. It must also give you a good faith estimate of the value of those goods or services.

  The organization can give you the statement either when it solicits or when it receives the payment from you.

Exception.   An organization will not have to give you this statement if one of the following is true.

  1. The organization is:

    1. A governmental organization described in (5) under Types of Qualified Organizations , earlier, or

    2. An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context.

  2. You receive only items whose value is not substantial as described under Token items , earlier.

  3. You receive only membership benefits that can be disregarded, as described earlier.

Expenses Paid for Student Living With You

You may be able to deduct some expenses of having a student live with you. You can deduct qualifying expenses for a foreign or American student who:

  1. Lives in your home under a written agreement between you and a qualified organization as part of a program of the organization to provide educational opportunities for the student,

  2. Is not your relative or dependent, and

  3. Is a full-time student in the twelfth or any lower grade at a school in the United States.

You can deduct up to $50 a month for each full calendar month the student lives with you. Any month when conditions (1) through (3) are met for 15 days or more counts as a full month.

For additional information, see Expenses Paid for Student Living With You in Publication 526.

Mutual exchange program.   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country.

Table 24-2. Volunteers' Questions and Answers

If you volunteer for a qualified organization, the following questions and answers may apply to you. All of the rules explained in this chapter also apply. See, in particular, Out-of-Pocket Expenses in Giving Services .
Question Answer
I volunteer 6 hours a week in the office of a qualified organization. The receptionist is paid $10 an hour for the same work. Can I deduct $60 a week for my time?  
 
 No, you cannot deduct the value of your time or services.
The office is 30 miles from my home. Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. If you don't want to figure your actual costs, you can deduct 14 cents for each mile.
I volunteer as a Red Cross nurse's aide at a hospital. Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering.
I pay a babysitter to watch my children while I volunteer for a qualified organization. Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. (If you have childcare expenses so you can work for pay, see chapter 31.)

Out-of-Pocket Expenses in Giving Services

Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:

  • Unreimbursed,

  • Directly connected with the services,

  • Expenses you had only because of the services you gave, and

  • Not personal, living, or family expenses.

Table 24-2 contains questions and answers that apply to some individuals who volunteer their services.

Conventions.   If a qualified organization selects you to attend a convention as its representative, you can deduct unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight in connection with the convention. However, see Travel , later.

  You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. You also cannot deduct transportation, meals and lodging, and other expenses for your spouse or children.

   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention.

Uniforms.   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization.

Foster parents.   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. A qualified organization must select the individuals you take into your home for foster care.

   You can deduct expenses that meet both of the following requirements.

  1. They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child.

  2. They are incurred primarily to benefit the qualified organization.

  Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. For details, see chapter 3.

Example.

You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Your unreimbursed expenses are not deductible as charitable contributions.

Car expenses.   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving services to a charitable organization. You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance.

   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution.

  You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate.

  You must keep reliable written records of your car expenses. For more information, see Car expenses under Records To Keep, later.

Travel.   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. This applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses.

  The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses.

Example 1.

You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. You participate in the activities of the group and enjoy your time with them. You oversee the breaking of camp and you transport the group home. You can deduct your travel expenses.

Example 2.

You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. The project is sponsored by a charitable organization. In most circumstances, you cannot deduct your expenses.

Example 3.

You work for several hours each morning on an archaeological dig sponsored by a charitable organization. The rest of the day is free for recreation and sightseeing. You cannot take a charitable contribution deduction even though you work very hard during those few hours.

Example 4.

You spend the entire day attending a charitable organization's regional meeting as a chosen representative. In the evening you go to the theater. You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater.

Daily allowance (per diem).   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. You may be able to deduct any necessary travel expenses that are more than the allowance.

Deductible travel expenses.   These include:

  • Air, rail, and bus transportation,

  • Out-of-pocket expenses for your car,

  • Taxi fares or other costs of transportation between the airport or station and your hotel,

  • Lodging costs, and

  • The cost of meals.

Because these travel expenses are not business-related, they are not subject to the same limits as business-related expenses. For information on business travel expenses, see Travel Expenses in chapter 26.

Contributions You Cannot Deduct

There are some contributions you cannot deduct, such as those made to specific individuals and those made to nonqualified organizations. (See Contributions to Individuals and Contributions to Nonqualified Organizations , next.) There are others you can deduct only part of, as discussed later under Contributions From Which You Benefit .

Contributions to Individuals

You cannot deduct contributions to specific individuals, including the following.

  • Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members.

  • Contributions to individuals who are needy or worthy. You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person.

    Example. You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. However, you cannot deduct contributions earmarked for relief of a particular individual or family.

  • Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses.

  • Expenses you paid for another person who provided services to a qualified organization.

    Example. Your son does missionary work. You pay his expenses. You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services.

  • Payments to a hospital that are for a specific patient's care or for services for a specific patient. You cannot deduct these payments even if the hospital is operated by a city, a state, or other qualified organization.

Contributions to Nonqualified Organizations

You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following.

  1. Certain state bar associations if:

    1. The bar is not a political subdivision of a state,

    2. The bar has private, as well as public, purposes, such as promoting the professional interests of members, and

    3. Your contribution is unrestricted and can be used for private purposes.

  2. Chambers of commerce and other business leagues or organizations (but see chapter 28).

  3. Civic leagues and associations.

  4. Communist organizations.

  5. Country clubs and other social clubs.

  6. Most foreign organizations (other than certain Canadian, Israeli, or Mexican charitable organizations). For details, see Publication 526.

  7. Homeowners' associations.

  8. Labor unions (but see chapter 28).

  9. Political organizations and candidates.

Contributions From Which You Benefit

If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. These contributions include the following.

  • Contributions for lobbying. This includes amounts that you earmark for use in, or in connection with, influencing specific legislation.

  • Contributions to a retirement home for room, board, maintenance, or admittance. Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution.

  • Costs of raffles, bingo, lottery, etc. You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. For information on how to report gambling winnings and losses, see Gambling winnings in chapter 12 and Miscellaneous Deductions in chapter 28.

  • Dues to fraternal orders and similar groups. However, see Membership fees or dues , earlier, under Contributions You Can Deduct.

  • Tuition, or amounts you pay instead of tuition. You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation.”

Value of Time or Services

You cannot deduct the value of your time or services, including:

  • Blood donations to the American Red Cross or to blood banks, and

  • The value of income lost while you work as an unpaid volunteer for a qualified organization.

Personal Expenses

You cannot deduct personal, living, or family expenses, such as the following items.

  • The cost of meals you eat while you perform services for a qualified organization unless it is necessary for you to be away from home overnight while performing the services.

  • Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final (but see Adoption Credit in chapter 36, and the instructions for Form 8839, Qualified Adoption Expenses). You also may be able to claim an exemption for the child. See Adopted child in chapter 3.

Appraisal Fees

You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property (but see chapter 28).

Contributions of Property

If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. See Giving Property That Has Increased in Value , later.

For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later.

Clothing and household items.   You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better.

Exception.   You can take a deduction for a contribution of an item of clothing or household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return.

Household items.   Household items include:

  • Furniture and furnishings,

  • Electronics,

  • Appliances,

  • Linens, and

  • Other similar items.

  Household items do not include:

  • Food,

  • Paintings, antiques, and other objects of art,

  • Jewelry and gems, and

  • Collections.

Cars, boats, and airplanes.    The following rules apply to any donation of a qualified vehicle.

A qualified vehicle is:

  • A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways,

  • A boat, or

  • An airplane.

Deduction more than $500.   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of:

  • The gross proceeds from the sale of the vehicle by the organization, or

  • The vehicle's fair market value on the date of the contribution. If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later.

Form 1098-C.   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle.

  If you e-file your return, you must:

  • Attach Copy B of Form 1098-C to Form 8453 and mail the forms to the IRS, or

  • Include Copy B of Form 1098-C as a pdf attachment if your software program allows it.

  If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation.

Filing deadline approaching and still no Form 1098-C.   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices.

  • Request an automatic 6-month extension of time to file your return. You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.  
    For more information, see Automatic Extension in chapter 1.

  • File the return on time without claiming the deduction for the qualified vehicle. After receiving the Form 1098-C, file an amended return, Form 1040X, claiming the deduction. Attach Copy B of Form 1098-C (or other statement) to the amended return. For more information about amended returns, see Amended Returns and Claims for Refund in chapter 1.

Exceptions.   There are two exceptions to the rules just described for deductions of more than $500.

Exception 1—vehicle used or improved by organization.   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. The Form 1098-C (or other statement) will show whether this exception applies.

Exception 2—vehicle given or sold to needy individual.   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. The Form 1098-C (or other statement) will show whether this exception applies.

  This exception does not apply if the organization sells the vehicle at auction. In that case, you cannot deduct the vehicle's fair market value.

Example.

Anita donates a used car to a qualified organization. She bought it 3 years ago for $9,000. A used car guide shows the fair market value for this type of car is $6,000. However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Neither exception 1 nor exception 2 applies. If Anita itemizes her deductions, she can deduct $2,900 for her donation. She must attach Form 1098-C and Form 8283 to her return.

Deduction $500 or less.   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of:

  • $500, or

  • The vehicle's fair market value on the date of the contribution. But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later.

  If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. The statement must contain the information and meet the tests for an acknowledgment described under Deductions of At Least $250 But Not More Than $500 under Records To Keep, later.

Partial interest in property.   Generally, you cannot deduct a charitable contribution of less than your entire interest in property.

Right to use property.   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. For exceptions and more information, see Partial Interest in Property Not in Trust in Publication 561.

Future interests in tangible personal property.   You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization.

Tangible personal property.   This is any property, other than land or buildings, that can be seen or touched. It includes furniture, books, jewelry, paintings, and cars.

Future interest.   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law.

Determining Fair Market Value

This section discusses general guidelines for determining the fair market value of various types of donated property. Publication 561 contains a more complete discussion.

Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.

Used clothing and household items.   The fair market value of used clothing and household goods is usually far less than what you paid for them when they were new.

  For used clothing, you should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. See Household Goods in Publication 561 for information on the valuation of household goods, such as furniture, appliances, and linens.

Example.

Dawn Greene donated a coat to a thrift store operated by her church. She paid $300 for the coat 3 years ago. Similar coats in the thrift store sell for $50. The fair market value of the coat is reasonably determined to be $50. Dawn's donation is limited to $50.

Cars, boats, and airplanes.   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. The guides may be published monthly or seasonally and for different regions of the country. These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. The prices are not “official” and these publications are not considered an appraisal of any specific donated property. But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area.

  You can also find used car pricing information on the Internet.

Example.

You donate a used car in poor condition to a local high school for use by students studying car repair. A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. However, the guide shows the price for a private party sale of the car is only $750. The fair market value of the car is considered to be $750.

Large quantities.   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold.

Giving Property That Has Decreased in Value

If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. You cannot claim a deduction for the difference between the property's basis and its fair market value.

Giving Property That Has Increased in Value

If you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction.

Your basis in property is generally what you paid for it. See chapter 13 if you need more information about basis.

Different rules apply to figuring your deduction, depending on whether the property is:

  • Ordinary income property, or

  • Capital gain property.

Ordinary income property.   Property is ordinary income property if you would have recognized ordinary income or short-term capital gain had you sold it at fair market value on the date it was contributed. Examples of ordinary income property are inventory, works of art created by the donor, manuscripts prepared by the donor, and capital assets (defined in chapter 14) held 1 year or less.

Amount of deduction.   The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. Generally, this rule limits the deduction to your basis in the property.

Example.

You donate stock you held for 5 months to your church. The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). Because the $200 of appreciation would be short-term capital gain if you sold the stock, your deduction is limited to $800 (fair market value minus the appreciation).

Capital gain property.   Property is capital gain property if you would have recognized long-term capital gain had you sold it at fair market value on the date of the contribution. It includes capital assets held more than 1 year, as well as certain real property and depreciable property used in your trade or business and, generally, held more than 1 year.

Amount of deduction — general rule.   When figuring your deduction for a contribution of capital gain property, you generally can use the fair market value of the property.

Exceptions.   In certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. Generally, this means reducing the fair market value to the property's cost or other basis.

Bargain sales.   A bargain sale of property is a sale or exchange for less than the property's fair market value. A bargain sale to a qualified organization is partly a charitable contribution and partly a sale or exchange. A bargain sale may result in a taxable gain.

More information.   For more information on donated appreciated property, see Giving Property That Has Increased in Value in Publication 526.

When To Deduct

You can deduct your contributions only in the year you actually make them in cash or other property (or in a later carryover year, as explained later under Carryovers ). This applies whether you use the cash or an accrual method of accounting.

Time of making contribution.   Usually, you make a contribution at the time of its unconditional delivery.

Checks.   A check you mail to a charity is considered delivered on the date you mail it.

Credit card.    Contributions charged on your credit card are deductible in the year you make the charge.

Pay-by-phone account.    Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount.

Stock certificate.   A properly endorsed stock certificate is considered delivered on the date of mailing or other delivery to the charity or to the charity's agent. However, if you give a stock certificate to your agent or to the issuing corporation for transfer to the name of the charity, your contribution is not delivered until the date the stock is transferred on the books of the corporation.

Promissory note.   If you issue and deliver a promissory note to a charity as a contribution, it is not a contribution until you make the note payments.

Option.    If you grant a charity an option to buy real property at a bargain price, it is not a contribution until the organization exercises the option.

Borrowed funds.   If you contribute borrowed funds, you can deduct the contribution in the year you deliver the funds to the charity, regardless of when you repay the loan.

Limits on Deductions

The amount you can deduct for charitable contributions cannot be more than 50% of your adjusted gross income (AGI). Your deduction may be further limited to 30% or 20% of your AGI, depending on the type of property you give and the type of organization you give it to. If your total contributions for the year are 20% or less of your AGI, these limits do not apply to you. The limits are discussed in detail under Limits on Deductions in Publication 526.

A different limit applies to certain qualified conservation contributions. See Publication 526 for details.

Carryovers

You can carry over any contributions you cannot deduct in the current year because they exceed your adjusted-gross-income limits. You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time. For more information, see Carryovers in Publication 526.

Records To Keep

You must keep records to prove the amount of the contributions you make during the year. The kind of records you must keep depends on the amount of your contributions and whether they are:

  • Cash contributions,

  • Noncash contributions, or

  • Out-of-pocket expenses when donating your services.

Note.

An organization generally must give you a written statement if it receives a payment from you that is more than $75 and is partly a contribution and partly for goods or services. (See Contributions From Which You Benefit under Contributions You Can Deduct, earlier.) Keep the statement for your records. It may satisfy all or part of the recordkeeping requirements explained in the following discussions.

Cash Contributions

Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction.

You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following.

  1. A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include:

    1. A canceled check,

    2. A bank or credit union statement, or

    3. A credit card statement.

  2. A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.

  3. The payroll deduction records described next.

Payroll deductions.   If you make a contribution by payroll deduction, you must keep:

  1. A pay stub, Form W-2, or other document furnished by your employer that shows the date and amount of the contribution, and

  2. A pledge card or other document prepared by or for the qualified organization that shows the name of the organization.

If your employer withheld $250 or more from a single paycheck, see Contributions of $250 or More , next.

Contributions of $250 or More

You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records.

If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions.

Amount of contribution.   In figuring whether your contribution is $250 or more, do not combine separate contributions. For example, if you gave your church $25 each week, your weekly payments do not have to be combined. Each payment is a separate contribution.

  If contributions are made by payroll deduction, the deduction from each paycheck is treated as a separate contribution.

  If you made a payment that is partly for goods and services, as described earlier under Contributions From Which You Benefit , your contribution is the amount of the payment that is more than the value of the goods and services.

Acknowledgment.   The acknowledgment must meet these tests.

  1. It must be written.

  2. It must include:

    1. The amount of cash you contributed,

    2. Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits),

    3. A description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and

    4. A statement that the only benefit you received was an intangible religious benefit, if that was the case. The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. An example is admission to a religious ceremony.

  3. You must get it on or before the earlier of:

    1. The date you file your return for the year you make the contribution, or

    2. The due date, including extensions, for filing the return.

  If the acknowledgment does not show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution. If the acknowledgment shows the date of the contribution and meets the other tests just described, you do not need any other records.

Payroll deductions.   If you make a contribution by payroll deduction and your employer withholds $250 or more from a single paycheck, you must keep:

  1. A pay stub, Form W-2, or other document furnished by your employer that shows the amount withheld as a contribution, and

  2. A pledge card or other document prepared by or for the qualified organization that shows the name of the organization and states the organization does not provide goods or services in return for any contribution made to it by payroll deduction.

A single pledge card may be kept for all contributions made by payroll deduction regardless of amount as long as it contains all the required information.

  If the pay stub, Form W-2, pledge card, or other document does not show the date of the contribution, you must have another document that does show the date of the contribution. If the pay stub, Form W-2, pledge card, or other document shows the date of the contribution, you do not need any other records except those just described in (1) and (2).

Noncash Contributions

For a contribution not made in cash, the records you must keep depend on whether your deduction for the contribution is:

  1. Less than $250,

  2. At least $250 but not more than $500,

  3. Over $500 but not more than $5,000, or

  4. Over $5,000.

Amount of deduction.   In figuring whether your deduction is $500 or more, combine your claimed deductions for all similar items of property donated to any charitable organization during the year.

  If you received goods or services in return, as described earlier in Contributions From Which You Benefit , reduce your contribution by the value of those goods or services. If you figure your deduction by reducing the fair market value of the donated property by its appreciation, as described earlier in Giving Property That Has Increased in Value , your contribution is the reduced amount.

Deductions of Less Than $250

If you make any noncash contribution, you must get and keep a receipt from the charitable organization showing:

  1. The name of the charitable organization,

  2. The date and location of the charitable contribution, and

  3. A reasonably detailed description of the property.

A letter or other written communication from the charitable organization acknowledging receipt of the contribution and containing the information in (1), (2), and (3) will serve as a receipt.

You are not required to have a receipt where it is impractical to get one (for example, if you leave property at a charity's unattended drop site).

Additional records.   You must also keep reliable written records for each item of contributed property. Your written records must include the following information.

  • The name and address of the organization to which you contributed.

  • The date and location of the contribution.

  • A description of the property in detail reasonable under the circumstances. For a security, keep the name of the issuer, the type of security, and whether it is regularly traded on a stock exchange or in an over-the-counter market.

  • The fair market value of the property at the time of the contribution and how you figured the fair market value. If it was determined by appraisal, keep a signed copy of the appraisal.

  • The cost or other basis of the property, if you must reduce its fair market value by appreciation. Your records should also include the amount of the reduction and how you figured it.

  • The amount you claim as a deduction for the tax year as a result of the contribution, if you contribute less than your entire interest in the property during the tax year. Your records must include the amount you claimed as a deduction in any earlier years for contributions of other interests in this property. They must also include the name and address of each organization to which you contributed the other interests, the place where any such tangible property is located or kept, and the name of any person in possession of the property, other than the organization to which you contributed it.

  • The terms of any conditions attached to the contribution of property.

Deductions of At Least $250 But Not More Than $500

If you claim a deduction of at least $250 but not more than $500 for a noncash charitable contribution, you must get and keep an acknowledgment of your contribution from the qualified organization. If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows your total contributions.

The acknowledgment must contain the information in items (1) through (3) under Deductions of Less Than $250 , earlier, and your written records must include the information listed in that discussion under Additional records .

The acknowledgment must also meet these tests.

  1. It must be written.

  2. It must include:

    1. A description (but not necessarily the value) of any property you contributed,

    2. Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), and

    3. A description and good faith estimate of the value of any goods or services described in (b). If the only benefit you received was an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in a commercial transaction outside the donative context, the acknowledgment must say so and does not need to describe or estimate the value of the benefit.

  3. You must get it on or before the earlier of:

    1. The date you file your return for the year you make the contribution, or

    2. The due date, including extensions, for filing the return.

Deductions Over $500

You are required to give additional information if you claim a deduction over $500 for noncash charitable contributions. See Records To Keep in Publication 526 for more information.

Out-of-Pocket Expenses

If you give services to a qualified organization and have unreimbursed out-of-pocket expenses related to those services, the following two rules apply.

  1. You must have adequate records to prove the amount of the expenses.

  2. If any of your unreimbursed out-of-pocket expenses, considered separately, are $250 or more (for example, you pay $250 or more for an airline ticket to attend a convention of a qualified organization as a chosen representative), you must get an acknowledgment from the qualified organization that contains:

    1. A description of the services you provided,

    2. A statement of whether or not the organization provided you any goods or services to reimburse you for the expenses you incurred,

    3. A description and a good faith estimate of the value of any goods or services (other than intangible religious benefits) provided to reimburse you, and

    4. A statement that the only benefit you received was an intangible religious benefit, if that was the case. The acknowledgment does not need to describe or estimate the value of an intangible religious benefit (defined earlier under Acknowledgment ).

You must get the acknowledgment on or before the earlier of:

  1. The date you file your return for the year you make the contribution, or

  2. The due date, including extensions, for filing the return.

Car expenses.   If you claim expenses directly related to use of your car in giving services to a qualified organization, you must keep reliable written records of your expenses. Whether your records are considered reliable depends on all the facts and circumstances. Generally, they may be considered reliable if you made them regularly and at or near the time you had the expenses.

  For example, your records might show the name of the organization you were serving and the dates you used your car for a charitable purpose. If you use the standard mileage rate of 14 cents a mile, your records must show the miles you drove your car for the charitable purpose. If you deduct your actual expenses, your records must show the costs of operating the car that are directly related to a charitable purpose.

  See Car expenses under Out-of-Pocket Expenses in Giving Services, earlier, for the expenses you can deduct.

How To Report

Report your charitable contributions on Schedule A (Form 1040).

If your total deduction for all noncash contributions for the year is over $500, you must also file Form 8283. See How To Report in Publication 526 for more information.

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