Can I Write Off Charitable Donations In 2018? A Comprehensive Guide

Navigating the world of taxes can feel like a complex maze, and understanding what you can and can’t deduct is crucial. Charitable donations are a common area of confusion. Did you donate to a worthy cause in 2018 and wonder if you could claim a deduction? Let’s break down the rules.

Understanding the Basics: Deducting Charitable Contributions

The ability to deduct charitable donations is governed by the Internal Revenue Service (IRS). Generally, if you itemized deductions on your 2018 tax return, you could potentially deduct cash and property contributions made to qualified organizations. This is a key point: you had to itemize to claim this deduction. If you took the standard deduction, you couldn’t deduct charitable donations.

Qualifying Organizations: Who Receives Your Generosity?

Not every organization qualifies as a charity for tax purposes. The IRS has specific rules about what constitutes a qualified organization. These typically include:

• Religious Organizations: Churches, synagogues, mosques, and other religious institutions.
• Educational Organizations: Schools, universities, and other educational institutions.
• Hospitals and Healthcare Organizations: Hospitals, medical research organizations, and other healthcare providers.
• Organizations That Operate Exclusively for Charitable Purposes: This is a broad category that includes many non-profits.

You can use the IRS’s Tax Exempt Organization Search tool to verify an organization’s status. Always double-check the organization’s status before donating.

Cash vs. Property: Different Rules Apply

The IRS distinguishes between cash contributions and contributions of property. The rules for calculating your deduction vary depending on the type of donation.

Cash Donations: Simplicity and Limits

Cash donations are generally straightforward. You’ll need to keep records of your cash contributions, such as bank statements, canceled checks, or receipts from the charity. For cash donations, you could generally deduct up to 60% of your adjusted gross income (AGI) if you donated to a public charity. Anything above that limit, if you were able to carry it over, would be available in future tax years.

Property Donations: Assessing Value and Limitations

Donating property, such as clothing, furniture, or vehicles, is more complex. You need to determine the fair market value of the property at the time of the donation. This can be a challenge. The deduction limits also differ. The deduction for donated property is often limited to 50% of your AGI for donations to public charities.

Keeping Records: Documentation Is Essential

Proper documentation is crucial for claiming charitable deductions. The IRS requires that you substantiate your contributions. This means providing evidence to support your claim.

• For Cash Donations: Keep bank records, canceled checks, or a written acknowledgment from the charity.
• For Property Donations: Get a receipt from the charity listing the property donated. For donations over $500, you’ll need to file Form 8283, Noncash Charitable Contributions, with your tax return. For donations over $5,000, you’ll also need a qualified appraisal. Always retain your records for at least three years after filing your return.

Itemizing Deductions: The Key to Claiming Your Donations

As previously mentioned, to deduct charitable donations in 2018, you had to itemize your deductions. This means you had to use Schedule A (Form 1040), Itemized Deductions, instead of taking the standard deduction. Itemizing involves calculating your total allowable deductions and comparing it to the standard deduction for your filing status. If your itemized deductions exceeded the standard deduction, you could claim the charitable donation deduction.

Charitable Donations and the Tax Cuts and Jobs Act of 2017

The Tax Cuts and Jobs Act of 2017, which impacted the 2018 tax year, significantly changed the landscape of tax deductions. One of the most significant changes was the near doubling of the standard deduction. This meant that fewer people itemized. This affected the ability of many taxpayers to claim charitable donations.

Specific Scenarios: Navigating Common Donation Types

Let’s consider some common donation scenarios and their tax implications.

Donations to Religious Organizations: Tithes and Offerings

Tithes and offerings to your church or religious organization are generally deductible as cash contributions. Remember to keep records of your donations.

Donating Used Clothing and Household Goods

Donating used clothing and household goods to a qualified charity is deductible. However, the item must be in good condition or better. You must determine the fair market value of the items.

Donating to Donor-Advised Funds

Donor-advised funds (DAFs) are charitable giving vehicles. You can make a contribution to a DAF and receive an immediate tax deduction. The funds are then managed by the DAF, and you can recommend grants to your chosen charities.

Avoiding Common Mistakes and IRS Audits

To avoid problems with the IRS, be meticulous with your record-keeping. Don’t inflate the value of donated property. Accurately determining fair market value is essential. Ensure the organization you donated to is a qualified charity. If you’re unsure about any aspect of the process, consult a tax professional.

The Impact of the Standard Deduction in 2018

The increase in the standard deduction from the Tax Cuts and Jobs Act was a significant factor in the tax landscape of 2018. Many people who previously itemized found that they no longer needed to. This meant that even if they made charitable donations, they couldn’t deduct them unless their total itemized deductions exceeded the standard deduction.

Frequently Asked Questions (FAQs)

What if I donated to a GoFundMe campaign in 2018?

Generally, donations to GoFundMe campaigns are not tax-deductible. However, if the campaign was specifically for a qualified charity, the donation may be deductible. You would need to verify that the campaign was set up by the charity and that the donations were received by them.

Can I deduct the value of my time spent volunteering?

No, the value of your time spent volunteering is not deductible. However, you may be able to deduct certain out-of-pocket expenses related to your volunteer work, such as the cost of transportation or supplies, provided they are not reimbursed.

Do I need a receipt for every donation, regardless of the amount?

For cash donations of any amount, you need to have some form of substantiation, such as a bank record or a receipt. For property donations, you need a receipt. If you donate $250 or more in cash or property, you need a written acknowledgment from the charity.

What if I donated to a political organization?

Donations to political organizations are generally not tax-deductible. This includes donations to political campaigns, political action committees (PACs), and other organizations that engage in political activities.

Is there a limit to how much I can deduct for charitable donations?

Yes. As described earlier, there are limits based on your adjusted gross income (AGI). For cash contributions to public charities, the limit is generally 60% of your AGI. For property donations, the limit is often 50% of your AGI. There are also carryover rules that allow you to deduct excess contributions in future years.

Conclusion: Maximizing Your Charitable Deductions

In 2018, the ability to deduct charitable donations hinged on itemizing your deductions. Keeping accurate records, verifying the qualified status of the organization, and understanding the different rules for cash and property donations were all crucial steps. The impact of the increased standard deduction meant that fewer taxpayers could claim this deduction. By understanding the rules and guidelines, you could potentially reduce your tax liability while supporting causes you care about. Remember to consult with a tax professional for personalized advice tailored to your specific circumstances.