Charitable giving is a great way to use your income to support worthy causes. Charitable contributions are encouraged in the tax law by providing incentives like personal deductions on your tax returns. While beneficial, claiming these deductions can also be challenging. To make it easier, use the following guide for a simplified overview of charitable deductions. 

What Is Considered a Charitable Contribution?

Most commonly, charitable donations are considered a gift of cash, goods, or services made to a nonprofit organization. The organization you donate to must be defined as religious, charitable, educational, scientific, or literary. They might also provide work that benefits children or animals.

Deductions can only be claimed if the gift is given to an organization, not an individual. The IRS does not allow charitable deductions for time, such as volunteer work, regardless of whether you can put a value on it. For instance, if you're a veterinarian providing volunteer services to an animal shelter, you may not deduct the cost of your services as a donation. However, you can deduct expenses, such as parking fees, tolls, travel expenses, and uniforms related to your volunteer work.

Donating appreciated assets such as property or stocks can result in a double benefit, as you can deduct the fair market value and avoid paying a capital gains tax if you've owned the property longer than one year. 

What Are the Minimum & Maximum Deductions?

Taxpayers may now deduct up to 60% of their adjusted gross incomes annually. To claim a charitable deduction on your tax return, you must itemize your deductions.

For deductions to be claimed for cash contributions of $250.00 or more, you must have a written acknowledgment from the donee organization ($500.00 for non-cash contributions).  Each donation, including payroll deductions, must be calculated separately. For instance, a weekly gift of $50.00 is treated as a separate gift.

Charitable donations can only be deducted to the extent that they exceed the value of any goods or services received. For instance, if you received a plated dinner or complimentary tote bag in exchange for your donation, you may only deduct the cost of your donation less the value of the item received.

To ensure you receive the maximum deductions when itemizing charitable donations on your tax return, visit The Callen Accounting Group, PLLC, in Mountain Home, AR. Since 1973, this team of knowledgeable tax preparation consultants has provided various services designed to ensure you benefit from every deduction available to you. Contact them at (870) 425-6066 to schedule an appointment, or visit them online to learn more about their services.