How to Take Tax Deductions for In-Kind Donations
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Making charitable donations is a great way to make use of extra items your family no longer needs. In addition to helping non-profit organizations, sizable donations can also help benefit your bottom line.

If you itemize tax deductions, charitable gifts can help reduce your tax burden.

Types of Charitable Gifts That Can Reduce Your Tax Burden

While small in-kind donations such as clothing and household items don’t usually offer significant tax benefits, big-ticket items can often reduce your tax bill. Donating vehicles, large household appliances, and even stocks can decrease your tax liability — but you need to follow proper IRS procedures.

Proper IRS procedure will depend on your donation type and size. If the amount of your qualifying deduction for all non-cash charitable donations exceeds $500, you will need to complete and include Form 8283 with your return. If any property you donate is worth more than $5,000 in value, you’ll generally need to include a qualified appraisal and other documentation along with your tax return. To qualify, the appraisal must take place no more than 60 days before the item is donated. Some charitable organizations also accept stock donations, which may help you decrease your capital gains tax liability.

If you plan to donate a car, boat, or airplane that you claim is worth more than $500, the process is slightly different. You must fill out Form 1098-C and outline whether the vehicle will be sold as is, improved then sold, or offered to a needy individual significantly below the fair market value of the vehicle. If you donate through a nonprofit organization that sells the vehicle for more than $500, the organization should provide you with documentation outlining the following:

  • The vehicle identification number
  • Your name and tax ID number
  • The date it the vehicle was sold
  • The gross sale proceeds
  • A statement that the organization provided no tangible goods or services in exchange for the vehicle

Remember that your deduction can’t exceed the proceeds the charity made on the sale.

Amount You Can Deduct for Your Charitable Donation

The amount you can deduct related to charitable contributions directly correlates to your adjusted gross income. These limitations relate to both the type of contribution you are making (i.e. cash, property, or stock) and the type of organization to which you are donating (i.e. public or private), and generally range from 20 percent to 50 percent of your income.

Before you make and finalize your charitable donations, ensure they are qualified. The IRS makes this process easy with its online Exempt Organization Select Check tool.

If you follow these simple tax tips, your charitable contributions may give you something back in return. Get more help filing your taxes at the Regions Tax Center.

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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.