Tax Tips
Limits on Deductions for Donations
We have basically done a clean sweep on our home. I donated everything we no longer wanted. Is there a limit to what we can claim?
By Kevin McCormally, Editorial Director, Kiplinger.com
March 14, 2005
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We have bought lots of new things this year: appliances, furniture, clothing. We have basically done a clean sweep on our home. I donated everything we no longer wanted. Is there a limit to what we can claim?
The law allows you to deduct the fair market value of your gifts to qualified charities. As for a limit, the rules are complicated, but, basically, your gifts to public charities, colleges and religious organizations can't exceed 50% of your adjusted gross income.
If your deduction for donated property exceeds $500 -- total, not per item -- you need to file an extra form with your tax return: Form 8283, Noncash Charitable Contributions. Also, if your gift to any organization exceeds $250, you need a receipt from the organization.
Another tip: When you sit down with your tax records, it ought to be easy to tote up your big charitable contributions. But don't forget to check your pay stub for how much you gave to the United Way or other charities via payroll deduction. And don't throw away tax savings by overlooking the little things, such as out-of-pocket expenses paid while volunteering at a school, for example, or helping with a charitable fundraiser.
Deductions include things such as parking fees, tolls, stamps, long-distance phone calls and 14-cents-a-mile if you drove your own car. Did you prepare food for a church-sponsored homeless shelter? The cost of the ingredients counts as a deductible expense if you itemize.
All this might sound like nickels and dimes, but it can really add up. And don't feel chintzy about it either; the more you save in taxes, the more generous you can be this year.