3 Top Tips for Maximizing Your Charitable Giving Write-offs

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Want to get charitable giving write-offs? It’s harder than it used to be. Learn the new IRS rules of tax deductible donations. 

Giving money or goods to charity can be a great way to get a break on your taxes — but you need to understand the IRS’s rules. Some donations to qualifying charities can allow you to get a tax deduction, where you subtract the amount of the donation from your taxable income. At its best, giving more money to charity can help reduce your tax bill. Sounds simple, right? The truth is more complicated.

First: if you want to give money or donate unneeded items to your favorite charity, good! Keep doing it. Being generous to charity is always a good idea. It’s a wonderful way to support your community and fund good causes. But just because you write a check or drop off a bag of old clothes at a nonprofit, that doesn’t mean you’re automatically going to get charitable giving write-offs at tax time.

Not all charities are properly set up to receive tax-deductible donations. Not all taxpayers are allowed to deduct charitable donations. If you want to maximize charitable giving write-offs on your taxes, it’s going to depend on several factors, including your income, marital status, stage of life, state of residency, and whether or not you’re a homeowner.

Let’s take a closer look at a few tips for how to navigate the complex reality of charitable giving write-offs.

1. Donate to a qualifying nonprofit or “tax-exempt organization”

The IRS has special rules for which kinds of organizations are allowed to be exempt from federal taxes, and which are allowed to receive tax-deductible donations. Here are a few examples of nonprofits that qualify:

Churches and other religious organizationsCharities like the Red Cross or United WayColleges, schools, universitiesOrganizations dedicated to education, such as museumsVeterans’ organizationsGovernments (local, state, or federal) — as long as your donation is intended for a public purpose

Nonprofit organizations like the ones listed above that can receive tax-deductible donations are called 501(c)(3) organizations. There are also some other types of nonprofits that do good work and are not required to pay taxes, but they are not allowed to accept tax-deductible donations. For example, organizations that do political campaign work or lobbying activity are not allowed to accept tax-deductible donations.

Nonprofits will usually be able to tell you if they are allowed to receive tax-deductible donations. But if you want to double-check, you can use the IRS website’s Tax Exempt Organization Search (TEOS) tool.

2. Itemize your tax deductions

Not everyone gets to automatically claim charitable giving write-offs at tax time. Under IRS rules, you can only deduct these donations if you itemize deductions on your tax return. But most Americans don’t itemize. Instead, they take the standard deduction — which is $13,850 for single filers, and $27,500 for married couples filing jointly for the 2023 tax year. If your itemizable deductions add up to a smaller amount than the standard deduction, you should take the standard deduction; that’s often going to be the best deal for your taxes.

Having such a high standard deduction is a good thing in many ways; it makes it simpler for most people to do their taxes. IRS data has shown that almost 90% of American tax returns use the standard deduction. But the standard deduction has made it harder for many people to get charitable giving write-offs.

Basically, if you want to get a tax break for your charitable donations, your itemized deductions need to add up to be more than the standard deduction. And that means you need to be racking up a lot of itemized deductions.

Here are some of the types of deductions that are included in itemized deductions — with certain limits:

State and local income taxes and real estate taxesState and local sales taxes (if you made a big purchase like a car, you might have paid a large amount of sales tax that could become an itemized deduction)Personal property taxesMortgage interestDisaster lossesGifts to charitiesSome medical and dental expenses

Keep in mind that there is a $10,000 limit per household on the amount of state and local taxes (SALT), which include homeowners’ property taxes, that can be itemized. This is known as the SALT deduction cap. If you live in a state that has high income taxes and high property taxes, you might not be able to deduct all of those costs on your federal tax return.

This change to the tax code was part of the 2017 Tax Cuts and Jobs Act, and it significantly raised the standard deduction. Only being able to deduct $10,000 of state and local taxes has made it harder for many Americans to get charitable giving write-offs. It’s harder for most people to itemize deductions than it used to be. And if you can’t itemize, you can’t deduct your nonprofit donations.

3. Keep receipts of your charitable donations

If you’ve crunched the numbers on your tax prep software and it turns out that you’re one of the small percentage of Americans who is better off itemizing deductions: congratulations! Now it’s time to claim your charitable giving write-offs on your tax return. But before you hit “send” to the IRS, make sure you have kept the receipts of your charitable donations.

Many nonprofits will give you a tax receipt at the end of the year to keep for your records; this can be convenient if you have set up recurring monthly donations to your favorite charities. Or if you donate canned goods to a food bank or old furniture to an organization like Goodwill, you can ask the nonprofit to give you a paper receipt for your donation of goods. The IRS requires you to keep a receipt for any donations of $250 or more. If you’re giving non-cash contributions of $500 or more, you’ll have to fill out additional forms.

Most Americans can no longer claim charitable giving write-offs on their taxes, because the standard deduction is so high. But if you are able to itemize deductions, if you give significant amounts to charity, and you want to make sure you’re maximizing your tax benefits, consult with a professional tax advisor. Working with an accountant or tax attorney is a great way to make sure you’re keeping receipts and filing the right forms for the level of donations that you’ve given.

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