Five Ways To Maximize Your Tax Deductions While Giving

Donation cardboard box with children's clothes and toys for a charity. — (Image credit: Getty Images)

Tis’ the season for giving, and your donations can actually give back to you by lowering your tax bill.

With a charitable donation, you can gift money or goods to a tax-exempt organization and reduce your taxable income on your federal tax return. Generally, you can deduct from 20% to 60% of your adjusted gross income through donations. However, there are some limitations.

For instance, cash donations to your company-sponsored fundraiser or department store may not be eligible. You can only deduct qualifying donations from an IRS-recognized tax-exempt organization or 501(c)3.

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Here are some places you can donate this holiday season.

1. Animal rescues or shelters

If you’re interested in donating to an animal shelter or sanctuary, you can do local research and look up registered 501(c)3 organizations in your area. You can also verify if they are a registered tax-exempt organization by calling them, or by using the IRS tax-exempt organization search tool online.

Some shelters serve as life-long homes for disabled or senior animals, while others focus on rehabilitation and rehoming for adoption. Here are some examples.

Goats of Anarchy

Goats of Anarchy is a farm animal sanctuary dedicated to the rescue and rehabilitation of goats with disabilities. The registered 501(c)3 charity has been operating for about 7 years and is located on a 30-acre property in Hampton, New Jersey.

Almost 240 animals call the sanctuary their home including goats, sheep, alpacas, equines, cows, pigs, farming birds, more than 30 barn cats, and a handful of dogs.

You can give Goats of Anarchy a one-time donation, sponsor your favorite animal, or even donate stock to support the animals at the sanctuary. If you’re in the neighborhood, you can even volunteer to help out the team for a regular shift at least once a week.

Best Friends Animal Sanctuary

Best Friends is the nation’s largest no-kill animal sanctuary. The group started by rescuing dogs and cats from high-risk shelters in Utah, and today has several chapters around the country including in Los Angeles, CA, Salt Lake City, UT, New York City, Northwest Arkansas, and Houston, TX

The organization currently has a network of more than 4,200 animal welfare, shelter partners, and community members across the country.

Some of their partner rescues were impacted by Hurricanes Helene and Milton earlier this year, but you can donate or adopt by visiting their website bestfriends.org.

2. Thrift stores

If you’re doing some spring cleaning this winter, your clothes, furniture, books, or appliances can be donated to 501(c)3 thrift stores. While Goodwill and the Salvation Army may come to mind, you can do some research and donate to a smaller local thrift.

For example, in New York City, Housing Works has several stores across the city and all proceeds go towards funding and legislation to ensure all persons living with HIV/AIDS have access to housing, healthcare, treatment, and prevention.

Housing Works accepts cash donations online, thrift and book donations at your local shop, and can even arrange furniture pickup.

3. Toy drives

If you’d like to donate toys this holiday season, you can get in touch with local toy drives in your state or city. Don’t know where to start your search? Well, your local children’s hospital, church, public library, or neighborhood group may give you a lead.

Some fire departments, like FDNY Firezone, are registered 501(c)3 organizations with a funding bank specifically for toys. If you’d like to donate, it’s often asked that gifted toys aren’t wrapped for security reasons.

If you’re looking to donate to a bigger organization, the Marine Toys for Tots Foundation accepts online cash donations or you can drop off a toy at a local chapter. Local campaigns are celebrated each year in over 800 communities across all 50 states, including the District of Columbia, Puerto Rico, and the Virgin Islands.

4. Food drive

As it gets colder outside, many families like to participate in food drives to give those in need a warm meal. If you’d like to participate or donate to a 501(c)3 organization, you can research your state food bank or pantry.

For instance, Feeding Florida has 9 chapters across the state that help serve 2,400 community-based partner agencies.
The organization helps feed 2.9 million Floridians facing hunger, including over 800,000 children.

No Kid Hungry

Another organization that accepts donations is No Kid Hungry, you can contribute by giving a one-time or monthly donation online.

All proceeds go to help feed children at school, at home, or during the summer months — when some kids are often the hungriest due to lack of school meals.

5. Charitable foundations

If you have a specific cause you’d like to donate to, like awareness of climate change, medical research, or a local school district, you can do so.

For example, St. Jude Children's Research Hospital is a 501(c)3 that accepts monthly or one-time donations to help families front bills for treatment, housing, or food, while their children get medical attention.

The American Civil Liberties Union (ACLU) Foundation is another non-profit organization you can donate to. All proceeds go toward defending and advancing civil liberties via litigation, education, and lobbying.

Building Homes for Heroes is an IRS-recognized 501(c)3 that builds and modifies mortgage-free homes for first responders, injured veterans, and their families.

As mentioned, your local public schools, libraries, and hundreds of other deserving organizations may have a registered 501(c)3 fund where you can donate cash or non-monetary gifts to support their initiatives for those in need.

How to deduct donations on your tax return

As with all tax records, you should keep all documentation that supports your charitable donations. This may include acknowledgment letters or bank statements.

To claim charitable donations on your tax return, you must itemize deductions on Schedule A attached to your IRS Form 1040. As mentioned, your limit on monetary donations is 60% of your adjusted gross income.

Whether you donated cash or gifted a non-cash donation, you must keep a record or written documentation from the qualified organization that includes the following information:

Date of contribution
Name of organization
The amount of cash donations and description (but not value) of non-cash contributions
Whether the charity gave you goods and services in return for your donation

Additionally, if you’ve donated property worth $500 or more, you must submit a Form 8283 with your federal income tax return.

If you have any questions about how to keep track of your charitable contributions, you can always ask your certified public accountant, trusted tax professional, or financial planner. They’ll be more than happy to help you as you seek ways to give during the holidays or year-round.

Gabriella Cruz-Martínez is a finance journalist with 8 years of experience covering consumer debt, economic policy, and tax.

Gabriella’s work has also appeared in Yahoo Finance, Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier.

As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances, no matter their stage in life.