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Charity Donations and Contributions

You must have a receipt from the charity or a bank record for all money donations, and the non-profit organization must be a tax-qualified charitable organization for you to take the charitable deduction.

You can not deduct the value of your time or services spent on charitable work, but you can deduct mileage or vehicle expenses if you use your car for charitable purposes, cash donations and property.

Your deduction for charitable contributions will generally be limited to 50% of your adjusted gross income. You may deduct your charitable contributions only if you itemize deductions.

Remember to ask the organization if your contribution is tax-deductible, or check with the IRS. If you contribute to a charity and receive something in return, like dinner or gift, then your deduction is the amount you paid or the value of the property you donated minus the value of the goods or services received.

Item Donations. When you donate property you can deduct the fair market value of the property, but you must reduce the value of the donated property by the amount of ordinary income or short-term capital gain as if you had sold the property for that fair market value.

Capital gain property describes donated property, which if sold would result in long-term capital gains. If you donate non-cash items with a total value of more than $500, you must file Form 8283 with your return. You may need a qualified appraisal for a donated item or a group of items with a value of more than $5,000.

If you donate a vehicle of any sort, with a claimed value of more than $500, you can deduct the lesser of fair market value or the amount of gross proceeds the charity received from the sale.

The charity will provide you with a copy of Form 1098-C, that shows information relating to your donation of the vehicle. You must attach a copy of Form 1098-C to your return. Limits on the Deduction. The deduction for charitable contributions generally is limited to 50% of your adjusted gross income (AGI).

The deduction for appreciated property is limited to 30% of your AGI if you choose to deduct the fair market value of the property, or 50% if you choose to deduct the basis of the property.

The 30% limit also applies to donations of property to some organizations.

A 20% limit applies to gifts of capital gain property to or for the use of an organization subject to the 30% limit. Contributions in excess of the limit can be carried forward for up to 5 years.