Giving to charity isn’t just a way to support causes you care about—it can also provide valuable tax benefits. Whether you donate cash, clothing, or household goods, your contributions may be tax-deductible, reducing your taxable income and potentially lowering the amount you owe.

But here’s the catch: Not all charitable donations qualify for a deduction, and the IRS requires proper documentation to claim them. At Basso & Guida, we help individuals and businesses maximize their deductions while ensuring compliance with tax laws. Here’s everything you need to know about deducting charitable donations and how to keep proper records.

1. What Donations Are Tax-Deductible?

To qualify for a deduction, your donation must be made to a recognized 501(c)(3) charitable organization or a qualifying tax-exempt entity.

Common deductible donations include:

• Cash contributions (via check, credit card, or direct deposit)
• Clothing and household items (must be in good condition)
• Stock or other investments (donating appreciated assets can provide tax advantages)
• Mileage driven for charitable purposes (e.g., volunteering for a nonprofit)
• Tangible goods (such as food, medical supplies, or equipment)

Non-deductible donations include:

• Contributions to individuals, political campaigns, or crowdfunding sites
• Money given to non-qualified organizations (always verify 501(c)(3) status)
• The value of your time or services (volunteering is rewarding, but not tax-deductible)

Pro Tip: Before donating, check the IRS Tax-Exempt Organization Search to confirm that the charity is eligible for deductions.

2. How Much Can You Deduct?

Your deduction depends on how much you donate and your income level:

• Cash donations: Typically deductible up to 60% of your adjusted gross income (AGI).
• Non-cash donations (clothing, furniture, etc.): Deductible based on fair market value. For anyone who is making non-cash donations – this is a must review website – click here to learn more!
• Stock or property donations: Often deductible at full market value without paying capital gains tax.

If your donations exceed IRS limits, you may be able to carry over excess deductions for up to five years.

3. The Importance of Recordkeeping for Charitable Deductions

To claim a deduction, the IRS requires proper documentation. The rules vary depending on the amount donated:

For cash donations under $250:

• A bank statement, credit card statement, or receipt from the charity is required.
• If you donated via payroll deduction, keep your pay stub or W-2.

For cash donations over $250:

• The IRS requires a written acknowledgment from the charity stating:
  • The amount donated
  • Whether you received anything in return (such as a dinner or event ticket)

For non-cash donations under $500:

• Keep detailed records including:
  • The name of the charity
  • A description of the donated items
  • The fair market value of each item

For non-cash donations over $500:

• You must file IRS Form 8283, listing the donated property and its appraised value.
• If a single donated item is worth over $5,000, you may need a qualified appraisal.

Pro Tip: Always get a receipt when donating items, especially large quantities of clothing or furniture.

4. How Charitable Giving Can Lower Your Taxable Income

Donations to qualified charities can reduce your taxable income, which in turn lowers your total tax liability.

Example 1: Cash Donation

If your adjusted gross income (AGI) is $75,000 and you donate $5,000 to a qualified charity, your taxable income drops to $70,000.

Example 2: Donating Appreciated Stock

If you donate $10,000 in stock, you can claim the full $10,000 deduction while avoiding capital gains tax.

Charitable donations can also help offset taxable income from business earnings for self-employed individuals and business owners.

5. Can You Deduct Charitable Donations If You Don’t Itemize?

To claim charitable deductions, you must itemize your deductions rather than taking the standard deduction. In 2024, the standard deduction is:

• $14,600 for single filers
• $29,200 for married couples filing jointly

If your total itemized deductions (including mortgage interest, medical expenses, and charitable donations) exceed these amounts, it may be beneficial to itemize. Otherwise, you’ll likely take the standard deduction instead.

Pro Tip: If your total deductions don’t exceed the standard deduction, consider bunching charitable donations into one year to maximize tax benefits.

6. How Businesses Can Benefit from Charitable Giving

Businesses can also receive tax advantages for charitable giving:

• Corporations can deduct up to 10% of taxable income for qualifying donations.
• Donating inventory or equipment can provide tax benefits while benefiting the community.
• Sponsorships for charitable events may be deductible as a business expense.

If you own a business, talk to Basso & Guida about structuring charitable giving strategies to maximize tax benefits.

Final Thoughts: Make Your Charitable Giving Work for You

Giving back feels great, and with proper documentation, it can also lead to significant tax savings. Just remember:

• Only donate to IRS-recognized charities.
• Keep receipts and records of every contribution.
• Itemize deductions if it makes sense for your tax situation.

At Basso & Guida, we’re here to ensure that your charitable giving works in your favor while keeping you IRS-compliant.

Schedule a Consultation today to discuss your tax strategy and maximize your deductions!