Many charitable donors plan giving ahead of time, knowing what items will be donated to which organizations. However, not all donations are created equal. The following list includes common donation types, deduction rules and the max deduction amount:
Cash
- Also includes checks, credit cards or payroll deductions
- Deduction = 100%
Long-term capital gains property
- Deduction = Current fair market value of appreciated stocks and bonds held more than one year
Mileage
- Deduction = $.14 cents per charitable mile driven in your personal vehicle (these rates are evaluated every calendar year by the IRS)
Ordinary-income property
- Includes stocks and bonds held one year or less, inventory and property subject to depreciation recapture
- Deduction = Lesser of fair market value or your tax basis
Property Use
- Includes vacation home use and artwork on loan
- Deduction = Generally none because the gift is not completed
Services
- Deduction = Only out-of-pocket expenses, not the fair market value of your services
Tangible personal property
- Deduction = Limited to your basis if the item isn’t related to the charity’s tax-exempt function, ex: antique donated for a charity auction
- Deduction = Fair market value of an item that is related to a charity’s tax-exempt function, ex: antique donated to a museum collection
Vehicle
- Deduction = amount the charity receives when it sells the vehicle
- Rules differ if the vehicle is being used by the charity
Before you go and make a charitable deduction, remember your annual donations deduction may be reduced if they exceed certain income-based limits. If you will receive a personal benefit from the donation, your deduction will be reduced by an amount equal to the value of the benefit. Also, various substantiation requirements apply, so you need to make sure you know what documentation is needed to receive the full deduction.
Donate to Charity and Save Taxes. The IRS rewards you for helping out charitable causes. Contact us to learn you can maximize your charitable donation!
