Feb. 21, 2023
Aloha United Way provides donors the opportunity to give to multiple charities and AUW initiatives and programs in one place. Whether you give to five different causes or just one, it’s important to understand how to manage your donations, records, and tax deductions each year.
From vehicles and clothing to event tickets, non-cash donations are managed differently.
- Items like clothing, computers, or even playground equipment are items that can be claimed as federal tax deductions by claiming fair market value on the items included in your donation.
- Vehicle donation deductions depend on how the organization used your donation. Did they keep or sell the vehicle at auction? It matters. The IRS provides a vehicle donation guide and you should receive clear documentation from the charity to proceed with any deductions.
- Did you buy a ticket to a charity golf tournament or gala? Remember that you can only deduct the amount that exceeds the value of what you received at the event. Just because the tournament cost you $1000 doesn’t mean that $1000 is tax deductible if the value of the golf that you received was $500.
Keeping your charitable contribution records together is important. From bank records to written acknowledgements from the charity and standard forms, you must establish good habits.
- A thank you letter is NOT intended for use as charitable donation documentation. If you donate $250 or more to a qualified organization, you should receive a written acknowledgement letter. This letter includes the name of the charitable organization you donated to, the total amount donated for the year, and EIN number of the organization, and whether you received any goods and services as a result of your contribution. The value of any goods or services received would reduce the tax deduction you can claim.
- Bank statements and credit card statements are definitive proof of contributions for cash donations. If you suspect you have not or did not receive an acknowledgement letter, print out bank/credit card statements. You should review, calculate, and obtain documentation that may be missing based on statements. Is your gift a payroll deduction? Keep your pay stubs.
- For non-cash donations, IRS Form 8283 should be used to detail organizations, gifts, value, and dates. This form should be used if your non-cash donations exceed $500.
- The IRS won’t let you deduct the value of your time volunteering, but the expenses related to volunteering to a qualified nonprofit can be considered tax deductible. This includes mileage or purchase of items directly and solely connected with the volunteer work. Keep your receipts.
How much can I deduct?
Generally, you can deduct up to 60% of your adjusted gross income to qualified charitable organizations. However, there are percentage limits depending on the type of contribution or the nature of the organization (private foundations, fraternal societies, or veterans organizations).
- In order to understand limits it is best to consult a tax professional and/or refer to IRS Publication 526.
- You can spread deductions across multiple years if you have exceeded the limit in the current year. This is a process called carryover. Again, it is best to consult a tax professional to determine what is best for you.
- To claim tax deductible donations, you will need to itemize your deductions. This means filling out Schedule A. This process can take more time and add cost to tax preparation, so it is important to weigh the costs and benefits accordingly if you are planning to itemize. It may not be worth it to itemize if your standard deduction will all ready exceed the amount of your itemized deductions.
Giving through Aloha United Way
For more than 100 years, Aloha United Way has helped our local community by connecting people and resources. Our nonprofit partner agencies have been carefully reviewed and assembled so donors can trust the application and impact of their donations. We are an organization that allows the donor to choose as many or as few agencies or AUW programs and initiatives as they want.
You have the opportunity to manage all your gifts in one place and we do not collect any fees for this. Please trust that 100% of your gift goes where you intend. If you would like to make impactful donations to your community simply, comprehensively, and easily please manage your philanthropic giving through Aloha United Way.
This information should be used for general information. If you have specific questions and need help with your deductible donations, please consult a tax professional.