Some Helpful Tips for People Thinking of Giving Year-End Tax-Deductible Gifts to Charities
Giving a gift of money or items to charity is generous, but there are rules if you plan to claim a tax deduction
As the year winds down, many donors look to support worthy causes and reduce their tax bill. Charitable giving offers both personal satisfaction and potential tax benefits, but only when you follow IRS guidelines. Here’s what you need to know to make sure your year-end gifts count on your 2024 return.
1. Confirm the Charity’s Tax Status
Only donations to IRS-recognized 501(c)(3) organizations are deductible. Check the charity’s status at the IRS Tax Exempt Organization Search before giving. Gifts to individuals, political groups, and most nonprofits without 501(c)(3) status are not deductible.
2. Itemize Deductions to Benefit
To claim any deduction, you must file Form 1040 and itemize on Schedule A. The standard deduction for 2024 is $13,850 single or $27,700 married filing jointly. If your total itemized deductions (mortgage interest, state and local taxes, charitable gifts, etc.) don’t exceed that, you won’t see a tax benefit from your donations, even though the charity still allows you to give.
3. Understand Contribution Limits
Most cash gifts are deductible up to 60% of your adjusted gross income (AGI). Gifts of appreciated stock or other property generally cap at 30% of AGI. Any excess can carry forward up to five years.
4. Document Every Donation
For cash gifts of any size, checks, credit card charges, or payroll deductions—keep a bank record or written acknowledgment showing the charity’s name, date, and amount. For gifts of $250 or more, obtain a contemporaneous written acknowledgment from the charity detailing the gift amount and stating that no goods or services were provided.
5. Rules for Non-Cash Donations
Donations of clothing, household items, or furniture must be in “good used condition or better.” If the claimed value of any single non-cash gift exceeds $500, complete IRS Form 8283. For items over $5,000 (excluding publicly traded securities), you generally need a qualified appraisal.
6. Donate by Year-End
Contributions are deductible in the year you make them. Checks must be mailed by December 31, and credit card or electronic gifts must post to your account by that date, even if the charity doesn’t deposit the funds until January.
7. Special Vehicle and Property Gifts
Donations of cars, boats, or planes over $500 generally are limited to the charity’s sale proceeds. The organization must send you Form 1098-C or a similar statement. Attach that form and any required appraisal summary to your return.
8. Consider Qualified Charitable Distributions
If you’re 70½ or older, you can direct up to $105,000 from an IRA directly to charity without recognizing taxable income. This counts toward your required minimum distribution and doesn’t require itemizing deductions.
Year-end giving can support causes you care about and trim your 2024 tax bill, just make sure you follow these rules for maximum benefit. Happy giving!