Disaster
relief. You
can deduct contributions
earmarked for flood relief,
hurricane relief, or other
disaster relief to a qualified
organization (defined later
under Organizations That Qualify
To Receive Deductible
Contributions).
However, you cannot deduct
contributions earmarked for
relief of a particular
individual or family.
Written
acknowledgment required. You
can claim a deduction for a
contribution of $250 or more
only if you have a written
acknowledgment of your
contribution from the qualified
organization or if you have
certain payroll deduction
records. For more information,
see
Records To Keep,
later in this chapter.
Payment
partly for goods or services. A
qualified organization must give
you a written statement if you
make a payment that is more than
$75 and is partly a contribution
and partly for goods or
services. The statement must
tell you 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. See
Contributions From Which You
Benefit, later in
this chapter, for more
information.
Limit on
itemized deductions. If
your adjusted gross income is
more than $142,700 ($71,350 if
you are married filing
separately), the overall amount
of your itemized deductions may
be limited. See chapter 31 for
more information about this
limit.
Introduction
This chapter explains how to
claim a deduction for your
charitable contributions. It
discusses:
Organizations that
are qualified to receive
deductible charitable
contributions,
The types of
contributions you can
deduct,
How much you can
deduct,
What records to
keep, and
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.
Useful Items - You
may want to see:
Publication
78
Cumulative List of
Organizations
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. To become a
qualified organization, most
organizations other than
churches and governments, as
described below, must apply to
the IRS.
You can ask any organization
whether it is a qualified
organization, and most will be
able to tell you. Or you can
check IRS Publication 78, which
lists most qualified
organizations. You may find
Publication 78 in your local
library's reference section, or
on the internet at
www.irs.gov. You can also
call the IRS Tax
Exempt/Government Entities
Customer Service at
1-877-829-5500 to find out if an
organization is qualified.
Types of
Qualified
Organizations
Generally, only the five
following types of
organizations can be
qualified organizations.
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 be
organized and
operated only for
one or more of the
following purposes.
Religious.
Charitable.
Educational.
Scientific.
Literary.
The
prevention
of cruelty
to children
or animals.
Certain
organizations that
foster national or
international
amateur sports
competition also
qualify.
War veterans'
organizations,
including posts,
auxiliaries, trusts,
or foundations,
organized in the
United States or any
of its possessions.
Domestic
fraternal societies,
orders, and
associations
operating under the
lodge system.
Note. 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.
Certain
nonprofit cemetery
companies or
corporations.
Note. 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.
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.
Note. To be
deductible, your
contribution to this
type of organization
must be made solely
for public purposes.
Examples.Qualified
organizations include:
Churches, a
convention or
association of
churches,
temples,
synagogues,
mosques, and
other religious
organizations.
Most
nonprofit
charitable
organizations
such as the Red
Cross and the
United Way.
Most
nonprofit
educational
organizations,
including the
Boy and Girl
Scouts of
America,
colleges,
museums, and
day-care centers
if substantially
all the child
care provided is
to enable
individuals (the
parents) to be
gainfully
employed and the
services are
available to the
general public.
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.
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
your contributions of money or
property that you make to, or
for the use of, a qualified
organization. A gift or
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.
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 is
generally limited to 50% of your
adjusted gross income, but in
some cases 20% and 30% limits
may apply. See
Limits on Deductions, later.
Table 26-1 lists
some examples of contributions
you can deduct and some that you
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.
If you pay more than fair
market value to a qualified
organization for
merchandise, goods, or
services, the amount you pay
that is more than the value
of the item can 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. All of the
proceeds of the function
go 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,
you 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 fund-raising
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.
In that case, subtract
the price of the tickets
from your payment. 80%
of the remaining amount
is a charitable
contribution.
Example 1.
You pay $300 a
year for membership
in an athletic
scholarship program
maintained by a
university (a
qualified
organization). 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 26-1.
Examples of
Charitable
Contributions—A
Quick Check
Use the
following
lists
for a
quick
check of
contributions
you can
or
cannot
deduct.
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)
Nonprofit schools and hospitals
Public parks and recreation facilities
Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girl Scouts, Boys and Girls Clubs of America, etc.
War veterans groups
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
Costs
you pay
for a
student
living
with
you,
sponsored
by a
qualified
organization
Cost of
raffle,
bingo,
or
lottery
tickets
Out-of-pocket
expenses
when you
serve a
qualified
organization
as a
volunteer
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 that your
$300 payment
included 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, your
contribution is that
part of your payment
that is more than the
reasonable value of the
right to attend the
event. 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 certain
membership benefits you
get in return for an
annual payment of $75 or
less to the qualified
organization. You can
pay more than $75 to the
organization if the
organization does not
require a larger payment
for you to get the
benefits. The following
benefits are covered
under this rule.
Any rights
or privileges,
other than those
discussed under
Athletic
events, earlier,
that you can use
frequently while
you are a
member, such as:
Free
or
discounted
admission
to the
organization's
facilities
or
events,
Free
or
discounted
parking,
Preferred
access
to goods
or
services,
and
Discounts
on the
purchase
of goods
and
services.
Admission,
while you are a
member, to
events that are
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 $8.20.
Token
items.
You can deduct your
entire payment to a
qualified organization
as a charitable
contribution if both of
the following are true.
You get 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 to
it that is more than $75
and is partly a
contribution and partly
for goods or services.
The statement must tell
you 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.
The
organization is:
The
type of
organization
described
in (5)
under
Types of
Qualified
Organizations,
earlier,
or
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.
You receive
only items whose
value is not
substantial. See
Token items,
earlier.
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:
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,
Is not your
dependent or
relative, and
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) above 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 26-2.
Volunteers'
Questions and
Answers
If
you do
volunteer
work 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 do
volunteer
work 6
hours a
week in
the
office
of a
qualified
organization.
The
receptionist
is paid
$6 an
hour to
do the
same
work I
do. Can
I deduct
$36 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
qualified
organization
where
you are
a
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
uniforms
that 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
do
volunteer
work for
a
qualified
organization.
Can I
deduct
these
costs?
No,
you
cannot
deduct
payments
for
child
care
expenses
as a
charitable
contribution,
even if
they are
necessary
so you
can do
volunteer
work for
a
qualified
organization.
(If you
have
child
care
expenses
so you
can work
for pay,
see
chapter
34.)
Out-of-Pocket
Expenses in
Giving Services
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 26-2
contains questions and
answers that apply to some
individuals who volunteer
their services.
Conventions.
If you are a chosen
representative attending
a convention of a
qualified organization,
you can deduct actual
unreimbursed expenses
for travel and
transportation,
including a reasonable
amount 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
travel, meals and
lodging, and other
expenses for your spouse
or children.
You cannot deduct
your expenses in
attending a church
convention if you go
only as a member of your
church rather than as a
chosen representative.
You can 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 designate the
individuals you take
into your home for
foster care.
You can deduct
expenses that meet both
of the following
requirements.
They are
unreimbursed
out-of-pocket
expenses to
feed, clothe,
and care for the
foster child.
They must be
mainly 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
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 any
part of 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 help
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 really
enjoy your time with
them. You oversee
the breaking of camp
and you help
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 the
amount of the allowance
that is more than your
deductible travel
expenses. You can deduct
your 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 28.
Contributions You
Cannot Deduct
There are some contributions
you cannot deduct, such as those
made to 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.
This includes
contributions to a
qualified
organization if you
indicate that your
contribution is for
a specific person.
But you can deduct a
contribution that
you give to a
qualified
organization that in
turn helps needy or
worthy individuals
if you do not
indicate that your
contribution is for
a specific person.
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 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.
Certain state
bar associations if:
The
state bar is
not a
political
subdivision
of a state,
The bar
has private,
as well as
public,
purposes,
such as
promoting
the
professional
interests of
members, and
Your
contribution
is
unrestricted
and can be
used for
private
purposes.
Chambers of
commerce and other
business leagues or
organizations.
Civic leagues
and associations.
Communist
organizations.
Country clubs
and other social
clubs.
Foreign
organizations other
than:
A U.S.
organization
that
transfers
funds to a
charitable
foreign
organization
if the U.S.
organization
controls the
use of the
funds or if
the foreign
organization
is only an
administrative
arm of the
U.S.
organization,
or
Certain
Canadian,
Israeli, or
Mexican
charitable
organizations.
See
Certain
foreign
charitable
organizations
under
Organizations
That Qualify
To Receive
Deductible
Contributions,
earlier.
Homeowners'
associations.
Labor unions.
But you may be able
to deduct union dues
as a miscellaneous
itemized deduction,
subject to the
2%-of-adjusted-gross-income
limit, on Schedule A
(Form 1040). See
chapter 30.
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. 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
that are clearly 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 chapter 13 and
chapter 30.
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,
even if you pay them
for children to
attend parochial
schools or
qualifying nonprofit
day-care centers.
You also cannot
deduct any fixed
amount you may be
required to pay in
addition to the
tuition fee 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 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 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, or
Adoption
expenses, including
fees paid to an
adoption agency and
the costs of keeping
a child in your home
before adoption is
final. However, you
may be able to claim
a tax credit for
these expenses and
exclude from your
gross income
adoption expenses
paid or reimbursed
by your employer.
See
Adoption Credit
in
chapter 39 and
Publication 968, Tax
Benefits for
Adoption.
You also may be
able to claim an
exemption for the
child. See
Adoption in chapter 3.
Appraisal
Fees
Fees that you pay to find
the fair market value of
donated property are not
deductible as contributions.
You can claim them, subject
to the
2%-of-adjusted-gross-income
limit, as miscellaneous
deductions on Schedule A
(Form 1040). See chapter 30.
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.
Partial
interest in property.
Generally, you cannot
deduct a charitable
contribution (not made by a
transfer in trust) 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 can deduct the value
of a charitable contribution
of a future interest in
tangible personal property
only after 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.
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.
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.
Publication 561 contains a
more complete discussion.
Used
clothing and household
goods.
Generally, the fair
market value of used
clothing and household
goods is far less than
its original cost.
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 aircraft.
If you contribute a
car, boat, or aircraft
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.
Example.
You donate your
car to a local high
school for use by
their students
studying automobile
repair. Your credit
union told you that
the “blue
book” value
of the car is
$1,600. However,
your car needs
extensive repairs
and, after some
checking, you find
that you could sell
it for $750. You can
deduct $750, the
true fair market
value of the car, as
a charitable
contribution.
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 14 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 its
sale at fair market
value on the date it was
contributed would have
resulted in ordinary
income or in short-term
capital gain. Examples
of ordinary income
property are inventory,
works of art created by
the donor, manuscripts
prepared by the donor,
and capital assets 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 less
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
that 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 less the
appreciation).
Capital
gain property.
Property is capital
gain property if its
sale at fair market
value on the date of the
contribution would have
resulted in long-term
capital gain. 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 gift of
capital gain property,
you usually can use the
fair market value of the
gift.
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 to a qualified
organization (a sale or
exchange for less than
the property's fair
market value) 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 that you mail to a
charity is considered
delivered on the date you
mail it.
Credit
card.
Contributions charged on
your bank credit card are
deductible in the year you
make the charge.
Pay-by-phone account.
If you use a pay-by-phone
account, the date you make a
contribution is the date the
financial institution pays
the amount. This date should
be shown on the statement
the financial institution
sends to you.
Stock
certificate.
A gift to a charity of a
properly endorsed stock
certificate is completed 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 gift is
not completed 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
charitable organization as a
contribution, it is not a
contribution until you make
the note payments.
Option.
If you grant an option to
buy real property at a
bargain price to a
charitable organization, you
cannot take a deduction
until the organization
exercises the option.
Borrowed funds.
If you make a contribution
with borrowed funds, you can
deduct the contribution in
the year you make it,
regardless of when you repay
the loan.
Limits on Deductions
If your total contributions
for the year are 20% or less of
your adjusted gross income, you
do not need to read this
section. The limits discussed
here do not apply to you.
The amount of your deduction
is limited to 50% of your
adjusted gross income and may be
limited to 30% or 20% of your
adjusted gross income, depending
on the type of property you give
and the type of organization you
give it to. These limits are
described below.
If your contributions are
more than any of the limits that
apply, see
Carryovers, later.
50% Limit
This limit applies to the
total of all charitable
contributions you make
during the year. This means
that your deduction for
charitable contributions
cannot be more than 50% of
your adjusted gross income
for the year.
Generally, the 50% limit
is the only limit that
applies to gifts to
organizations listed below
under 50% limit organizations.
But there is one
exception. A 30% limit also
applies to these gifts if
they are gifts of capital
gain property for which you
figure your deduction using
fair market value without
reduction for appreciation.
(See Special 30% Limit for
Capital Gain Property, later.)
50%
limit organizations.
You can ask any
organization whether it
is a 50% limit
organization and most
will be able to tell
you. Or you can check
IRS Publication 78 or
call the IRS Tax
Exempt/Government
Entities Customer
Service at the number
listed earlier under
Organizations that
Qualify To Receive
Deductible Contributions.
The following is a
partial list of the
types of organizations
that are 50% limit
organizations.
Churches and
conventions or
associations of
churches.
Educational
organizations
with a regular
faculty and
curriculum that
normally have a
regularly
enrolled student
body attending
classes on site.
Hospitals
and certain
medical research
organizations
associated with
these hospitals.
Publicly
supported
charities.
Private
operating
foundations.
Private
nonoperating
foundations that
make qualifying
distributions of
100% of
contributions
within 2˝ months
following the
year they
receive the
contributions.
Certain
private
foundations
whose
contributions
are pooled in a
common fund, the
income and
principal of
which are paid
to public
charities.
30% Limit
A 30% limit applies to
the following gifts.
Gifts to all
qualified
organizations other
than 50% limit
organizations. This
includes gifts to
veterans'
organizations,
fraternal societies,
nonprofit
cemeteries, and
certain private
nonoperating
foundations.
Gifts for the
use of any
organization.
However, if these
gifts are of capital
gain property, they
are subject to the
20% limit, described
later, rather than
the 30% limit.
Student
living with you.
Amounts you spend on
behalf of a student
living with you are
subject to the 30%
limit. These amounts are
considered a
contribution for the use
of a qualified
organization.
Special 30%
Limit for
Capital Gain
Property
A special 30% limit
applies to gifts of capital
gain property to 50% limit
organizations. (For gifts of
capital gain property to
other organizations, see
20% Limit,
later.) However, the special
30% limit does not apply
when you choose to reduce
the fair market value of the
property by the amount that
would have been long-term
capital gain if you had sold
the property. Instead, only
the 50% limit applies.
Two
separate 30% limits.
This special 30% limit
for capital gain
property is separate
from the other 30%
limit. Therefore, the
deduction of a
contribution subject to
one 30% limit does not
reduce the amount you
can deduct for
contributions subject to
the other 30% limit.
However, the total you
deduct cannot be more
than 50% of your
adjusted gross income.
Example.
Your adjusted gross
income is $50,000.
During the year, you
gave capital gain
property with a fair
market value of $15,000
to a 50% limit
organization. You do not
choose to reduce the
property's fair market
value by its
appreciation in value.
You also gave $10,000
cash to a qualified
organization that is not
a 50% limit
organization. The
$15,000 gift of property
