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Are Charitable Contributions Tax Deductible? A Guide To Making Donations

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Are Charitable Contributions Tax Deductible? A Guide To Making Donations

Donating to a charity, nonprofit or other organization is a way to contribute to a cause you support. It's also a way to receive tax deduction savings because the Internal Revenue Service (IRS) allows taxpayers to deduct charitable donations from their taxes. There is a wide range of charities and organizations you can donate to, but not all of them qualify for tax deductions. Instead, charities or organizations need to receive approval from the IRS. If your favorite charity has IRS approval, you have the green light to donate and claim a tax-saving write-off. This deduction is a little different from self-employment deductions as they only affect income taxes. However, if you're self-employed and deducting charitable contributions, they could still affect whether or not you have to make estimated tax payments. A tax liability over $1,000 (including both 1099 and W-2 taxes) means making quarterly tax payments to the IRS. It can be confusing to navigate the tax world when it comes to charitable contributions. Essentially, you can take full advantage of some tax write-offs for your donations, regardless of the donation amount. Reading this guide will help you understand everything you need to know about charitable contributions as tax deductions, what counts as a charitable contribution and how to use your charitable contribution for tax write-off savings.

Table of contents

Key takeaways...Read more

What are charitable donations? ...Read more

Are charitable donations tax deductible?...Read more

How does charitable giving affect taxes?...Read more

Are church donations tax deductible?...Read more

Volunteering ...Read more

Dry cleaning ...Read more

High-valued items...Read more

Gifting vehicles...Read more

Non-qualified organizations or donations...Read more

Future contributions...Read more

Donations to a non-qualified organization...Read more

Political campaigns ...Read more

Donations without proof...Read more

Donations made in another tax year...Read more

Benefiting from your donation ...Read more

Fundraising events...Read more

How much can you claim in tax deductions without receipts?...Read more

Foreign charitable giving...Read more

Key takeaways

  • You can claim the charitable donations tax deduction if the organization meets the IRS criteria.
  • Places of worship qualify for tax write-offs.
  • Not every donation qualifies as a charitable contribution in the eyes of the IRS.

What are charitable donations?

Charitable donations are gifts given to a charity, non-profit or organization to help achieve a goal. You can donate money or items like furniture, electronics or a car. You may qualify for a tax deduction if you don’t benefit financially or otherwise from the tax-deductible donations. So, if you receive a gift or recognition for your contribution, you may not be eligible to claim it as a tax deduction.

Are charitable donations tax deductible?

Charitable donations are tax deductible if they meet the IRS' criteria. The charity, organization or non-profit needs to have 501(c)3 status from the IRS and are exempt from federal income tax. It’s best to confirm if the charity or organization has 501(c)3 status before donating. Organizations may list the status on their website, but it might be best to confirm their status by calling or emailing. On the IRS website, you can also use the Tax Exempt Organization Search tool to confirm if a charity or organization is eligible for a donation tax deduction.
Infographic entitled Types of Business Insurance listing insurance expenses that can be written off from 1099 taxes.
Organizations with 501(c)3 status are typically charitable organizations, churches, religious organizations or private foundations. Charitable contributions for 2023 can include both cash and goods. For example, donating fabric, bedding or other household items to a qualifying organization like Goodwill or the Salvation Army qualifies as a donation tax deduction. This deduction only affects federal taxes, not 1099 tax. Some other examples of tax-deductible donations that are new or gently used include:
  • Toys or stuffed animals
  • Clothing and shoes
  • Furniture
  • Holiday decorations
  • Purses, bags or luggage
  • Plates, bowls and silverware
  • Baby items
  • Workout equipment
It’s tempting to want to donate your junk or items like partially used toiletries and undergarments. Many organizations don’t accept these items, so it’s best to follow the organization’s tax deduction for donations guidelines. Another good rule of thumb is that you should donate something someone else can actually use. It shouldn’t be broken, or have stains, rips or pulls.

How does charitable giving affect taxes?

Charitable donations can help reduce both your tax bill and taxable income, all while contributing to a worthy cause. Whether you decide to itemize your donations or take a standard deduction, both can score tax savings. Let’s say you decide to donate to a qualified charity. After receiving the gift, the charity gives you a receipt for your donation. Using this receipt, you can either deduct the charitable contributions for 2023 as itemized deductions on Schedule A, Form 1040 or take a standard deduction. Both qualify as a deduction. But, any charitable donation tax deduction has to be less than 60% of your annual gross income.
Infographic entitled Types of Business Insurance listing insurance expenses that can be written off from 1099 taxes.

Are church donations tax deductible?

The IRS uses the term church to refer to any religious place of worship. Therefore, Christian churches, mosques and temples fall under the church category for tax purposes. Not every place of worship qualifies for the IRS church distinction. To receive an IRS qualification, the place of worship must have:
  • Religious history
  • Its own literature, creed or doctrine
  • A set worship location
  • Elected leaders who lead the service
The IRS will decide whether the church qualifies for tax write-offs. Typically, your donation will be eligible for the donation tax deduction if your place of worship operates solely for religious and educational purposes. So whether you’re tithing or giving a one-time donation, both instances would qualify for a tax write-off. For the 2023 tax filing year, you can itemize your church donations on Schedule A. Unlike 2023 tax filing, for 2021 tax filing there is no need to itemize your church donations on Schedule A. Instead, you can deduct up to $300 as a standard deduction as a single filer. Be sure to save your check stubs or receipts when donating to a place of worship.

Volunteering

Using your time to help someone or help an organization is a great way to give back. The IRS won’t let you deduct your time volunteering, but you can deduct the expenses directly related to the organization you volunteered. You can deduct the miles driven to the events or to deliver items for donation. Suppose you volunteer by delivering water and snacks to the annual walk for the American Heart Association. You can deduct the miles driven to deliver the items as a tax deduction charity write-off.

Dry cleaning

It’s important to look good while on your trip. Fortunately, laundry and dry-cleaning services count as travel expenses. No more excuses for wrinkled clothes!

High-valued items

If you’re donating valuable items, including artwork, real estate, precious stones or jewels, watches or rare collectibles, they are subject to certain requirements and rules. Working with a tax advisor is best if you’re considering donating these items. FlyFin’s CPAs can offer unlimited advice and help you navigate this circumstance.

Gifting vehicles

When it’s time to say goodbye to your beloved vehicle, instead of sending it to the junkyard, you can donate it to a charity. The amount you can deduct depends on if the car was sold by the charity, in which case you would deduct the sale price, or in most other cases, you can use the car’s market value.
Infographic entitled Types of Business Insurance listing insurance expenses that can be written off from 1099 taxes.

Non-qualified organizations or donations

It can be tempting to assume you will get a guaranteed tax write-off every time you contribute to a charity or organization. But nothing seems straightforward when it comes to the IRS, and it’s good to be aware of the tax-deduction exceptions. As a result, you may not qualify for a write-off for the charitable contributions you make. Let’s look at some examples of those instances.

Future contributions

Some organizations structure their contributions in the form of pledges. A donor commits to a certain amount over time, like a capital campaign. The IRS does not consider a pledge as a tax-deductible contribution. Only the amount you contribute during the tax year is eligible for a deduction. Let’s say, for example, that the private school your child attends is running a capital campaign to build a new school. They ask every family to pledge $1,000 to be paid throughout the school year. You cannot write off the potential future payments you’ll make to this pledge as a tax deduction for donations.

Donations to a non-qualified organization

When it comes to donating, we might not think twice about contributing to our favorite charity or organization. But when it comes time to file your taxes, you may discover that your donation isn’t tax deductible. Organizations and charities must receive a 501(c)3 approval from the IRS for the contribution to count towards a deduction.

Political campaigns

Perhaps you want to support your local politician by contributing to their campaign fundraiser. Since the nature of a political campaign differs from a charity or non-profit organization, your contribution cannot count towards a tax write-off.

Donations without proof

Parting with the mountain of receipts in your home can be tempting. Yet, the IRS requires proof of any charitable donation tax deductions you’ve made. Yes, every single donation must have proof, no matter how small. You can use bank statements, receipts and canceled checks as proof if the deduction is below $250. If your donation is over $250, a receipt is always required. Contributions other than cash may require additional documentation. It can be helpful to use FlyFin to track your expenses, including any charitable contributions you’ve made throughout the year, and find every deduction.

Donations made in another tax year

Writing off an unclaimed charity tax donation from another tax year can be tempting. But this won’t fly with the IRS. The check or bank transfer date must occur within the filing tax year. Although you may donate on a certain day, the payment processing date is what matters for tax filing purposes. So be sure to make your charitable contributions before the deadline.

Benefiting from your donation

When donating, the organization or charity is on the receiving end of your gift. Technically, you don’t receive anything in return except for the gratification that you’ve helped a good cause and maybe a donation tax deduction. However, if you receive something in return for your contribution, the IRS will not consider your contribution tax-deductible. So, for example, if you pay to participate in a charity race, it will not count towards a write-off since you will benefit from your contribution.

Fundraising events

Buying raffle tickets or attending a bingo fundraiser may seem like a great way to score a tax write-off. Unfortunately, fundraising events do not count toward a write-off. Contributing to a GoFundMe account won’t count as a write-off either unless the organization has 501(c)3 status.

How much can you claim in tax deductions without receipts?

The IRS requires proof for every charity tax deduction. Proof can include a bank record, such as a canceled check or a receipt from the organization. The receipt should include the organization’s name, contribution date and the amount. Without proof, you can only include cash donations of less than $250, and you need to provide your bank record or record of the payroll deduction. You will need a receipt for any donation of more than $250 or a donation other than cash.

Foreign charitable giving

Are donations tax deductible for overseas charities? Many great international charities help countries during disasters. Although these charities are all great causes, the IRS only allows a tax deduction for donations in the US. Also, the organization must be a US-based company. If you want to donate to help victims of the Turkey earthquake or refugee causes in Africa, any tax deductions for donations won’t be accepted by the IRS. When it comes to making any charitable donation, always check that the organization is approved by the IRS. When in doubt, consult a tax expert to help guide you through the process.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

Meals Tax Deduction

The meals and entertainment deduction in 2023 allows 1099 workers to deduct 50% of business meal costs. Certain meal and entertainment expenses are still fully deductible.

Business Travel Tax Deduction

Expenses related to traveling are deductible for business purposes. A per diem rate is set for deductible travel expenses.

Clothing And Accessories Tax Deduction

Self-employed individuals can take the clothing tax deduction if their clothes cannot be worn outside the work environment.

Commission And Fees Tax Deduction

Self-employed individuals can claim certain commissions and fees as tax deductions if they are related to their business and are ordinary and necessary.

Contract Labor Tax Deduction

If you do any contract labor, you will have to pay contract labor taxes, also known as SE tax. Estimated payments quarterly need to be made for tax liabilities over $1,000.

Internet and WiFi Tax Deduction

Self-employed individuals can deduct some of their internet bills if they work from home as part of the home office deduction. Internet costs can also be reported on Schedule C.

Medical and Dental Tax Deduction

Certain dental and medical costs can be claimed as a medical tax deduction if itemized when paying income taxes. Expenses have to be more than 7.5% of AGI.

Rent Tax Deduction

Rent is tax deductible for self-employed individuals who work from home or have a separate office space. Some states offer renters tax credits to lower state taxes.

Repair and Maintenance Tax Deduction

Capital improvements can be claimed as a tax deduction through depreciation. Repairs to rental properties can be claimed as a business expense.

Professional and Legal Services Tax Deduction

Legal fees are tax deductible from 1099 taxes under the legal and professional fees category on Schedule C. The category also includes consultant and tax prep fees.

Shipping Tax Deduction

Business-related shipping expenses are tax-deductible. Shipping supplies and the cost of shipping are included as write-offs.

Software Tax Deduction

Software depreciation can be claimed with the straight-line method, Section 179 or through amortization. Report software depreciation on Form 4562.

Student Loan Payment Tax Deduction

Student loan interest paid is tax-deductible, and every type of education loan qualifies for the deduction.

Taxes and Licenses Tax Deduction

Self-employed individuals can take the license fee tax deduction on taxes and licenses that are ordinary and necessary business expenses.

Training and Education Tax Deduction

The educator expenses tax deduction allows eligible educators to deduct $300 of unreimbursed expenses from their taxes. Use education tax credits to lower tax liability.

Utilities Tax Deduction

Utilities are tax deductible when they are an ordinary and necessary business expense. They can be claimed with the home office deduction or as a rental property deduction.

Vehicle Insurance Tax Deduction

Interest on a car loan is tax deductible if it is used for business. Choose between the standard and actual method when claiming the vehicle deduction.

Vehicle Purchase Tax Deduction

You can claim the vehicle tax write-off if you’re self-employed and use your vehicle for business. It can also be taken if you lease your vehicle.

Mortgage Interest Tax Deduction

The mortgage interest deduction can be claimed by homeowners who itemize their expenses. You could claim the mortgage interest tax credit if you’re in a lower tax bracket.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

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