I get this question often, especially this time of year. Many of us are very generous, but hesitate to claim all of that charitable generosity as an itemized deduction on our tax returns for fear of it triggering an IRS Audit.
So, are your charitable contributions higher than average? Lower than average?
I compiled the following table which shows you average charitable deductions based on income levels. Simply find your income range in the left column.
Any money or property you donate to qualified charitable organizations is eligible for a tax deduction.
Charitable deductions based on income levels…
| Income range | Average charitable deduction | % of taxpayers claiming |
| $0-$20,000 | $1,634 | 4% |
| $20,000-$50,000 | $2,281 | 15% |
| $50,000-$100,000 | $2,877 | 45% |
| $100,000-$200,000 | $3,886 | 75% |
| $200,000-$250,000 | $5,726 | 87% |
| $250,000-$500,000 | $8,917 | 89% |
| $500,000-$1,000,000 | $18,152 | 92% |
| $1,000,000 or more | $134,390 | 94% |
Based on this, it’s safe to say that if you earned $75,000 last year and claimed a $3,000 charitable deduction, this may not raise any IRS flags.
One important note. The lower the income, the lower the percentage of taxpayers taking charitable deductions.
This is a good time to review the basic rules for Charitable Contributions, both cash and non-cash.
Charitable contributions are only deductible if you itemize deductions on Form 1040, Schedule A (PDF), Itemized Deductions.
To be deductible, you must make charitable contributions to qualified organizations. Payments to individuals are never deductible. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deduction purposes, ask them for proof of their qualifying status.
You can deduct only the amount that exceeds the fair market value of the benefit received if your contribution entitles you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event.
What records should you maintain of contributions?
For a contribution of cash, check or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution.
It is not always possible to get a receipt for cash contributions: Think of Salvation Army buckets, local sports teams collecting outside supermarkets, etc. Simply keep a log of those types of contributions and provide that to me at year end with your other tax papers.
In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
You must fill out Form 8283 (PDF), Noncash Charitable Contributions, and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return.
Special rules apply to donations of certain types of property such as automobiles, inventory and investments that have appreciated in value.
For help determining the value of your noncash contributions, call me on 732-673-0510.
Click Here to Read The Companion Memo – Charitable Contributions – My Top Tips
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Chris Whalen, CPA
(732) 673-0510
79 Oak Hill Road
Red Bank, NJ 07701
