How to Get Credit for Your Charitable Giving During Tax Time

Not all donations can be written off on your taxes. For example, a donation to a private party or individual does not count. If you donate your time to an organization, you may not deduct the value of your time either. In this post we’ll take a closer look at what is required to receive credit for charitable donations.SalvationArmyPhoto

Qualified Organizations Only

The organization that you donate to must be a 501-3c to qualify for a tax credit. These are verified as non-profit organizations. The IRS also offers an IRS Exempt Organizations Select Check search option on the website so that you can see if your organization of choice is there.

Keep Receipts

Keep all of your receipts and make sure to get one. Get receipts for cash donations as well. This is proof of your donation to the organization should disputes of validity come into play.

Avoid Incentives

Any time that an organization or charity event advertises gifts for donations, the value of those gifts may offset the donation amount. In some cases, the entire donation amount can be disqualified if an incentive was received. It is important to deduct the value of the incentive received from the donation amount.

Document Values of Donated Goods

Every item has a value. Document the value of the goods being donated and have those values reflected on a receipt. You may also have an organization representative sign an itemized list of goods and their values.

It is important to be aware of the status of the organization you wish to donate to. You may think that you are helping a great organization and will receive a tax credit and end up discovering otherwise. Do your homework before making a charitable donation.

Image credit: Mike Mozart

Is Every Donation Tax Deductible?

Many believe that every donation to a charity is tax deductible. In actuality, there are charitable organizations which are not tax-exempt, and donations to these types of organizations are not tax deductible. The IRS offers a database of organizations so you can see if donating to a specific charity is tax-deductible.


Look for 501(c)(3) Status

Whether it be money or tangible goods, in order for a donation to be tax deductible the organization to which it is given must hold 501(c) (3) status. Incorrectly writing off a deduction can result in the issuance of an audit. When organizations are tax exempt, you benefit from being allowed to deduct donations.

Time is not Deductible

Although time does have value, it is not tax deductible in terms of volunteering to work for an exempt charity. Volunteering is something done purely for charitable purposes, it has no value other than the joy of helping others. Some have attempted to deduct values based upon hours of volunteered time, but such attempts are not accepted.

Receiving a Gift for Making a Donation

Making a donation at charity events where prizes are awarded or items are raffled off are almost always non-tax deductible. This is because you receive something of value in return. So, even though your contribution seems like a charitable donation, in this instance it is actually a transaction between you and the charity.

Closing Thoughts

Prior to making donations, be sure to research the organization if tax deductibility is important to you. If it is not clearly listed in printed material that the organization in question is tax-exempt, inquire further for a definite answer. When donating items of value, always make sure that you get a receipt showing the value of the donation and what the item donated was.

Image credit: Anthony Easton

Huddleston Tax CPAs of Seattle & Bellevue
Certified Public Accountants Focused on Small Business

(800) 376-1785
40 Lake Bellevue Suite 100, Bellevue, WA 98005

Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.