Comprehensive Donation Tax Forms: Your Ultimate Guide to Filing a Donation Form for Taxes

Comprehensive Donation Tax Forms: Your Ultimate Guide to Filing a Donation Form for Taxes

When you donate to charity, you're not just giving back; you could be getting back. Donations to qualified organizations can provide a deduction against your taxable income, up to 50-60% of your adjusted gross income. In addition to the tax receipts received from charities, such filing also depends on the nature and value of donations when filing charitable donation tax forms to the IRS.

Tax receipts are crucial communications mailed to donors by nonprofits, typically within 48 hours of donation. Year-end tax receipts make filing taxes easier and strengthen donors' connections with your organization. In this post, we'll outline the various tax forms your donors need and how Paybee can help your nonprofit issue such receipts.

What is Considered a Charitable Donation?

Giving money or goods to a tax-exempt organization constitutes a charitable donation, potentially lowering your taxable income. To claim a tax deduction, the contribution must be made to an IRS-recognized non-profit organization without receiving anything in return. So, if you donate to a personal crowdfunding campaign on GoFundMe, you usually can't deduct that from your taxes.

Charitable Contribution Requirements

The non-profit to which the donation is being made must be registered with the IRS as a 501(c)(3) organization. A gift directly to a relative or another individual won't be allowed as a deduction. Along these same lines, gifts to a personal crowdfunding campaign, like GoFundMe, won't be eligible as they're typically considered personal gifts.

This means they must be operated avowedly for exempt purposes such as religious, charitable, scientific, testing for public safety, literary, or educational. The IRS's tool, Tax Exempt Organization Search, allows you to check the status of an organization's taxes to determine whether your contribution is eligible for deduction.

Moreover, since the IRS assumes these gifts are made without reciprocation, If you get something in return for your gift, then the deduction would be only for the over and above the value of the benefit. For instance, if you donate $200 to a charitable organization for a fundraising dinner where you get a meal worth $80, then only the excess above that can be deducted from your taxable income, which is $120. Typically, most organizations include a donation receipt to advise how much one can deduct.

When you donate property, you'll deduct only the property's fair market value as a charitable contribution. The IRS has extensive information regarding contributing property. If your contributed property is $5,000 or more in value, you must complete Section B of Form 8283.

How Tax-Deductible Donations Work

Understanding how tax-deductible donations work is essential for maximizing your charitable contributions. The following steps help ensure compliance and maximize tax benefits when filing your return.

Donation to a Qualified Organization

For your contributions to be tax-deductible, they must be made to an organization that is exempt under section 501(c)(3) of the Internal Revenue Code. Before contributing to any charity, ask how much of your donation will be tax-deductible.

Examples of qualified organizations include religious organizations, the Red Cross, nonprofit educational agencies, museums, volunteer fire companies, and organizations that maintain public parks.

It can be a bit more complicated because an organization can exist as a nonprofit without being a 501(c)(3). Ensure your charity of choice qualifies by verifying its status through the IRS Exempt Organizations Select Check tool. Gifts to family or friends aren't considered deductible contributions, and if they reach a specific amount, they may also be liable for the gift tax.

Document Your Charitable Contributions

Keep track of all your tax-deductible donations, both big and small. For monetary donations, qualifying documents include a bank statement, a credit card statement along with a receipt from the charity (including date, amount, and name of the organization), or a canceled check.

If you donated through payroll deduction via your employer, keep copies of W-2s or pay stubs with the date and amount in your records.

You'll need extra documentation in the following circumstances:

  • Cash or property donations of more than $250: You must get a written letter of acknowledgment from the charity. It should include the amount of cash donated, whether you received anything in return, and an estimate of the value of those goods or services. You must receive the letter no later than the date you file your taxes—see the deadline here—for the year in which you donated.
  • Non-cash donations worth at least $500: You'll need to complete Form 8283 if you deduct at least $500 in donated items. You must also attach an appraisal of your items to the form if they're worth more than $5,000 in total.

Don't Miss Volunteering Tax Deductions

While IRS rules mean you can't deduct the value of your time or service, out-of-pocket expenses incurred while volunteering for a qualified organization can be counted as tax-deductible donations.

These expenses must be directly and solely connected to the volunteer work you have done, not previously reimbursed, and not personal, living, or family expenses. Donations that are eligible for tax deductions can include the miles driven to attend charitable events or volunteer activities, as well as the miles driven to deliver items to donation sites.

You can either deduct actual expenses with receipts for gasoline and similar costs, or you can take the standard mileage deduction.

If you plan to write off your actual costs, keep the receipts in case of an audit.

Mind the Deadline

To ensure your donation is considered tax-deductible when filing, it must be made by the end of the corresponding tax year. For instance, you have until December 31, 2024, to make donations you wish to claim on your 2024 tax return, which must be filed by the 2025 tax deadline.

The IRS establishes the delivery date of a donation in the following manner:

  • Credit Card: The date the charge was processed, not when the bill was paid.                                 
  • Checks: The date the check was mailed, not received.
  • Stock: The date the broker transfers the gift to the charity.
  • Options: The exercise date of the option by the charity.

Claiming Tax-Deductible Donations on Your Tax Return

Generally, preparing your tax return involves adding your charitable, tax-deductible contributions by itemizing your deductions. This means filling out Schedule A along with the rest of the tax return that pertains to you.

Itemizing deductions is more time-consuming than taking the standard deduction and may require pricier tax software or result in a higher fee from your tax preparer. Additionally, if your standard deduction is more than the sum of your itemized deductions, it may be worth taking the standard deduction. However, if you abandon itemizing, you give up the deduction for your donations.

Different Charitable Donation Tax Forms

To comply with IRS requirements, donors who contribute $250 or more need to provide bank records or written receipts from the nonprofit organization. These receipts should be received by the time donors file their tax returns or by the return due date.

Different types of donations require specific documentation; organizations need to be aware of what to provide for various donation types, such as online contributions, in-kind gifts, event tickets, and more.

Cash Donations

Receipts for cash donations must detail the gift amount- nonprofits usually send tax receipts or written acknowledgments after receiving these contributions.Donors use the information from these receipts to complete Schedule A on Form 1040 or 1040-SR. If the deduction exceeds $250, these receipts must be included when filing.

Online Donations and Event Tickets

Online donations are treated like cash donations by the IRS. Nonprofits are required to issue receipts for contributions over $250- donors then report these deductions on Form 1040.501(c)(3) nonprofits often issue receipts for all online donations- regardless of the amount. These receipts must state that no goods or services were exchanged for the donations.

Donors may also deduct the value of event tickets or auction items if their fair market value exceeds the amount paid. In such cases, nonprofits should provide a description and a good faith estimate of the value of goods and services received.

Platforms like Paybee facilitate the sending of automated, customized donation receipts, including year-end tax receipts summarizing total donations. Event ticket purchasers also receive automated receipts detailing the tax-deductible status of their tickets and providing other pertinent information.

In-Kind or Other Non-Cash Donations

Non-cash gifts (clothing, furniture, property, vehicles, stocks, and volunteer expenses) can also be deducted from taxes.Donors giving non-cash items valued over $500 need to file Form 8283 with their tax return- nonprofits must issue receipts for these contributions but shouldn't assign a value. Donors are responsible for determining the fair market value of the non-cash items- defined as the price someone would typically pay for the items or services.

As mentioned earlier on, when a nonprofit receives property or the use of property without charge, they're required to acknowledge this non-cash gift. The donor must fill out Section B on Form 8283, which must then be signed and acknowledged in writing by an authorized representative of the nonprofit.

Tips for Deducting Charitable Contributions

There are many nuances to filing your taxes, so here are some things to keep in mind when deducting your donations:

  • Ensure that you're donating to a qualified charitable organization.
  • You must file Form 1040 and itemize deductions on Schedule A to deduct charitable contributions.
  • If you receive any benefit from your donation, you can only deduct the portion that exceeds the gift minus the value of the benefit you received. 
  • When deducting any monetary gift, one should also keep information containing the name of the Organization, date of Contribution, and amount of Contribution
  • If you donate property valued at $5,000 or more, a qualified appraisal is required

How to Fill Out a 1040 Donation Tax Form

If you file using tax software, you'll be prompted for information that will auto-populate Form 1040 and, as needed, supporting schedules in the background. The software will then e-file it with the IRS, and you can print a copy or download one for your records.

If you prefer to complete your return manually, you can download Form 1040 from the IRS website.

The form can appear complex, but it does four basic things:

Asks About Who You Are

The top of Form 1040 gathers basic information about who you are, what tax filing status you'll use, and how many tax dependents you have.

Figures Out Your Taxable Income

Form 1040 adds up all your income for the year and all the deductions you can take. The goal is to determine your taxable income, which is how much of your income is eligible for income tax. You, your preparer, or tax software will use the federal tax brackets to do this calculation.

Calculates How Much Tax You Owe

Near the bottom of Form 1040, you'll write down how much income tax you're liable for. Then, you get to subtract any tax credits you might be eligible for and any taxes you've pre-paid via withholding taxes from your paycheck during the year.

Determines Whether You Have Already Paid Part or All of Your Tax Bill

Form 1040 helps you figure out if those tax credits and withholding taxes are enough to cover the bill. If they're not, you may have to pay the rest when you file your Form 1040. If you have paid too much, you'll get a tax refund. Form 1040 even has a line item where you can tell the IRS where to send your money.

Changes to Form 1040-SR

Form 1040-SR was enacted into legislation by President Trump in the Bipartisan Budget Act of 2018 to be used in 2019. Form 1040-SR is specifically designed for seniors, applying to individuals who are at least 65 years old by the end of the tax year for which they're filing. However, if the individual is married and filing jointly, this requirement only applies to one taxpayer.

The most noticeable difference in Form 1040 compared to Form 1040-SR is the size of the type/font. Form 1040-SR has a much larger font, along with larger boxes for seniors to fill in their information and numbers when completing the handwritten document. There's also wider spacing on informational pages in Form 1040-SR for easier reading.

Another significant change seniors will see is the Standard Deduction section near the top. This section includes a question about taxpayer age and blindness, given the fact that millions of today's seniors experience age-related vision problems. The number of checkmarks here determines your standard deduction if you don't itemize deductions using Schedule A.

Form 1040-SR includes an embedded standard deduction table, which helps seniors quickly calculate their standard deduction. Moreover, Form 1040-SR does not reflect the income limitations applicable under older versions of Form 1040. It has no maximums for ordinary income, dividends, capital gains, and other taxable income.

People above the age of 65 years are not obligated to use Form 1040-SR. Nevertheless, it's considered senior-friendly in that it has a larger font, making it easily readable, and the spaces for filling out information have been enlarged.

How to Fill Out a 8283 Donation Tax Form

The filer must first fill out their name and identifying number. For corporations, this is the employer identification number (EIN). For individuals, it's their Social Security number (SSN).

Fill Out Information for Each Column in Part I of Section A

Name and Address of the Organization

Provide the name and address of the organization receiving the donation.

Vehicle Identification Number (VIN)

If the donated property is a vehicle, include the vehicle identification number (VIN).

Property Description

Describe the donated property. If it's a vehicle, include the year, make, model, mileage, and general condition. For securities, provide the name and number of shares.

Date of Contribution

Enter the date when the contribution was made.

Date When the Property Was Acquired

Specify the date when the property was originally acquired.

Details on How the Property Was Originally Acquired

Provide details on how the property was acquired.

Cost or Adjusted Basis

This should not be filled out if the property was held for at least 12 months or if it's publicly traded securities.

Fair Market Value

State the fair market value of the property at the time of the donation.

How the Fair Market Value Was Determined

Explain how you determined the fair market value of the property.

Fill Out Part II if Applicable

Part II should be filled out if less than an entire interest in a property listed in the previous section was donated.

Include Form 1098-C for Specific Donations

Taxpayers who file Form 8283 and have made contributions of motor vehicles, boats, and/or airplanes may also need to include Form 1098-C, which shows the gross proceeds.

Frequently Asked Questions

Are Charitable Donations Tax-Deductible?

Although subject to percentage limitations based on your adjusted gross income, all charitable contributions are generally deductible. The primary limits vary depending on the type of contribution and organization involved. In almost all cases, the limit is applied to aggregate donations for a specific tax year and not on a per-charity basis. If you contribute over the limit, you can carry over any excess for up to five years in a carryover manner.

How much of my charitable contributions can I deduct?

The Internal Revenue Service says that, in general, most charitable cash contributions are limited to 60% of a taxpayer's adjusted gross income.

Is it worth claiming donations on taxes?

Donations are usually worth claiming on taxes; any type of deductible donation will lower the total taxable income, which may save an individual money.

Can I deduct charitable contributions if I don't itemize?

The Internal Revenue Service says you must itemize your deductions to claim a charitable contribution on your federal tax return.

Are tithes to the church tax deductible? 

So long as the church is qualified to be exempt under IRS terms, your donation will be tax-deductible for tax deduction purposes. You can check using the Tax Exempt Organization Search tool on their website.

Why Use Paybee for Donation Receipts?

Paybee makes it easy and efficient to run your nonprofit fundraising, ensuring that your donors receive their charitable donation receipts and yearly receipts for tax purposes. Check our website for more details on Donation Receipts and other fundraising features- schedule a demo today!

Summing Up: Building Stronger Donor Relationships with Paybee

Charitable donation tax receipts are one of the best win-win scenarios for donors and charities. They can also be a significant way to deepen relationships with donors.

Who doesn't love someone making filing their taxes a little bit easier?

Indeed, charities that send out their donors' year-end receipts via mail in January will be greatly appreciated, as donors will receive the relevant receipts well in advance of their tax deadlines. Paybee is with you every step of the way!

Personalize our receipts to your liking and win the hearts of your donors. But wait, there's more—visit our website to see how our robust, easy-to-use fundraising and donor management tools can help you succeed.

From recurring donations to events, membership, crowdfunding, and peer-to-peer, there's no limit to how Paybee can power your fundraising. Want more on tax receipts, nonprofit tax returns, thank-yous, and more? Check out the Paybee Nonprofit Blog.

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Anastasia-Alexandra Nenova

Born and raised in South Africa, Anastasia-Alexandra is a Bulgarian writer and fighter. When she isn't writing, she's busy training or competing in Judo for South Africa. She's passionate about Judo where she is a 2nd Dan, other martial arts and fitness overall. Her dream is to qualify for the Olympic Games in Judo, and she's doing her best to turn that dream into reality.