What Are Tax-Deductible Donations?

person on charity website for donations

If you like to donate to your favorite charity every year, that charitable contribution is most likely a tax-deductible donation. In fact, you can deduct up to 60% of your adjusted gross income if it’s a cash donation and up to 50% of your AGI for non-cash donations. But how do you know for sure if you can deduct it from your taxes?

A Donation Is an Itemized Deduction

First and foremost, you can only take a deduction for charitable donations if you are itemizing your deductions. If you choose to take the standardized deduction instead, you will not be able to deduct any donations.

Qualified Charitable Organizations

If you are itemizing your deductions, then for your donation to be considered deductible, it must go to a qualified charitable organization. That organization must be a tax-exempt, non-profit organization with a religious, charitable, educational, scientific, or literary purpose, or one that works to prevent cruelty to animals or children. In other words, money you donate to your cousin’s GoFundMe campaign for his next vacation does not count because it would be considered a personal gift.

Some examples of a qualified charitable organization are the Boys and Girls Clubs of America, the Red Cross, museums, non-profit schools, hospitals, churches, mosques, temples, and synagogues.

Not sure if your favorite charity qualifies? The IRS offers a search tool (https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations) to find out which ones do qualify.

**Keep in Mind: If you receive any sort of benefit in return for your donation, the deduction you can take will be reduced by the value of that benefit.

Non-Cash Charitable Contributions

You don’t have to give cash to take a deduction. A non-cash charitable contribution could be other property, such as clothing or a car, and you would deduct the fair market value of that property. You can also deduct any out-of-pocket expenses paid while volunteering, including travel and/or automobile expenses.

Donations That Are Not Deductible

Not every type of charity can be deducted. You may be able to deduct expenses while volunteering, but you cannot deduct for the time you spent volunteering. Other donations that are not considered deductible include contributions to political organizations, for-profit businesses, non-qualified charitable organizations, school tuition, or the cost of raffle/bingo/lottery tickets. You also can’t deduct any amount paid to a college or university in exchange for athletic tickets.