And museum memberships. And the support of public television. And church dinners.
Taxpayers often believe that checks written to a qualifying charitable organization necessarily results in a tax deduction. That’s only partly true.
A charitable donation is tax-deductible only to the extent that the donation exceeds the value of any goods or services received in exchange. If you make a charitable donation and receive something in exchange, you can only deduct the cost of your donation less the value of the item received. That applies not only to simple donations (in exchange for items) but also memberships: anything of value that you receive – from a tote bag to a coffee mug to a dinner – must be deducted from the value of your donation.
If you’re not sure of the value of an item or service received after a donation, just ask. Most charitable organizations will do the math for you and document the value of your donation on their thank you letter or receipt.
Some charitable organizations even spell out the exact deductible amount on their website, like the National Zoo.
You’ll report your deductible gifts to qualifying charitable organizations on Schedule A of your form 1040, assuming that you itemize. If you don’t itemize your deductions, you may not claim your charitable donations, no matter the amount.
It’s easy to forget that not every check you write out to a charitable organization is fully deductible – especially when it comes to memberships. The key is to get good information – and then hold onto it. It’s easy to forget the actual deductible amounts after you write out the check. Hold onto your receipt, any acknowledgment letter from the charity, and documentation showing exactly what’s deductible. Once you report the correct amount on your tax return, keep the documentation together with your copy of the return just in case there is ever a question.