Can your Charitable Donations claim Tax Deductions?

Shortgo Posted On January 31, 2024

Charitable donations bring about all kinds of good – from benefitting the charity itself to spreading goodwill in the community. Certain types of donations can also lead to tax deductions if the proper paperwork is filled out, and for small businesses in particular, these deductions can make a major difference. When getting your tax deductions that come with charitable donations, you have to ensure that you are on the same page as the IRS as for what qualifies you, and consequently what steps need to be taken:

The recipient organizations have to qualify – not all non-profits are acceptable to the IRS.
Each type of donation (clothes, food, time, money, etc.) has different regulations with it.
Individual, business, and corporate donors have different restrictions on donations.
Dollar amount donated.

Tax deduction claims have all sorts of caveats and limits that come with them, and the below are just a few that are important to know. The U.S. Chamber of Commerce has even more specifications, as well as resources to help navigate these rules available.

To claim a charitable contribution deduction, the recipient organization must be registered as a tax-exempt organization as defined by Section 501(c)(3) of the Internal Revenue Code.
You can also donate time (by volunteering) or property; while you won’t be able to deduct the value of your service or time, you can deduct expenses related to volunteering.
Not every organization will have the same donation percentage that you can deduct on your taxes.
Generally, you can deduct up to 60% of your adjusted gross income in charitable donations. However, depending on the type of organization and type of contribution, you may be limited to 20%, 30%, or 50%.
If you donate above those percentages, you may be able to apply that deduction to the following tax year. Carryover donations cannot be applied beyond the next five tax years.
Percentage limits are in place for all of the donations you make within the tax year. Regardless of how many organizations you donate to, the limitations will still apply.