- The IRS seeks to prevent taxpayers from giving money to their friends and prohibits taking deductions for giving money to specific individuals. Instead, as a way to regulate charitable donations, the IRS allows deductions to be taken for donations to qualified organizations. To become a qualified organization, an entity must apply to the IRS for that designation. The entity must be organized for a religious, charitable, educational, scientific or literary purpose, to prevent the cruelty to children or animals, or to promote certain amateur sports. War veterans' organizations, domestic fraternal associations, certain nonprofit cemetery companies and the United States or any state or U.S. territory performing substantial government functions are considered qualified organizations as well. The IRS maintains an electronic list of the current qualified organizations on its website.
- You may make charitable donations by cash or check. You may also donate property to a qualified organization. If you donate property, you must follow certain rules with respect to the valuation of that property, which will determine the amount of your deduction.
- To claim a deduction for your charitable donations, you must itemize your deductions on Form 1040, Schedule A. You will report your charitable contributions on lines 16 through 19 on Schedule A. If you made certain noncash contributions, you may be required to complete Form 8283.
- You must keep records of your charitable donations to claim them as a deduction. This means you should keep canceled checks, bank records or any acknowledgments from the charitable organization that describe the date and amount of the contribution. If your donation exceeds $250, then your substantiation must show whether the organization provided any goods or services that were given to you in exchange for the gift.
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