question.jpgIn Federal Income Tax

How much of my donations can I deduct?

Generally, you can deduct the total value of your donation. For cash contributions, this means you can generally deduct the full amount you donated, as long as it was given to a qualified organization. However, if you receive a benefit from your contribution, you must subtract the value of that benefit from the amount you claim in your deduction. For example, if you purchase something from a charity auction, you have to subtract the value of the item from the auction payment, and you can only claim that difference. Similarly, if you pay to attend a charity dinner, sporting event, etc., you can only deduct the amount on top of the value of the event itself. However, if you only receive token items when you make a donation (such as the shirts or tote bags that come along with a public television donation), you do not need to reduce the value of your claim.

If you contribute more than $75 to a qualified organization, and at least part of that money is for goods or services sent to you, the organization is generally required to provide you with a written statement which details what amount of the donation you can deduct by providing an estimated value of the benefit you received for your donation. You should retain this document and use it in preparing your tax returns.

When you donate property, rather than cash, you can generally deduct the fair market value of that property. For used clothing and other households goods, this fair market value is typically much less than your original purchase cost - instead, you should claim what the property can be resold for today. For more guidance in figuring out the fair market value of your property, you should review IRS Publication 561.

Finally, there are certain limits to the overall amount of charitable donations which you can claim in any given year. First, you may be limited in how much you can claim if the total amount of your contributions is exceptionally large. Second, depending on your adjusted gross income, you may have to apply the 2% reduction to some of your deductions, including any charitable contributions.