PriorTax | What Are Charitable Contributions?

What Are Charitable Contributions?

Charitable contributions, in cash or in property donated to qualified organizations, are tax deductible only if you itemize your deductions on Schedule A.

If your contribution allows you some form of compensation, such as merchandise, goods, services, or admission to a charity ball, banquet, theatrical performance, or sporting event, you can only deduct the amount of your contribution that exceeds the fair market value of the benefit you received.

For all donations regardless of amount you must keep either a bank record or a written communication from the charitable organization indicating the name of the charity as well as the date and amount of the contribution.

In addition, any contribution over $250 requires a contemporaneous written acknowledgment from the organization indicating the amount of cash or property donated, any goods or services provided in return, and an estimate of their value. One letter can serve as both written communication and contemporaneous written acknowledgement.

Finally, for any noncash charitable contribution of donated property valued above $500 you must file Form 8283. Remember that the exact dollar amount of your contribution in this case is generally equal to the fair market value of property at the time of the contribution.