The charity tax deduction is a write-off that you can claim on your tax return. A write-off lowers your taxable income, which leads to lower taxes.
This deduction is an itemized tax deduction found on the Schedule A of your 1040 personal income tax return. It is actually a highly missed tax deduction even though it is a very commonly used write-off.
The most common types of deductible charitable donations will be monetary donations and non-monetary donations. A monetary donation is money given to a charitable organization. This is typically in the form of cash, check, credit-card, paypal, etc. You simply gave the organization money. A non-monetary donation is when you give goods, such as household items. A good example would be that you give clothing, electronics, or some old furniture to a Goodwill or a Red Cross. Regardless of monetary or non-monetary, both count towards the charity tax deduction.
When you give money as a charitable donation, you deduct the amount that you gave. When you give non-monetary goods, you are supposed to deduct the “fair-market value” of the goods at the time of your donation. For example, if you bought a new box of crayons for $5 and never used it, your fair-market value would be around $5 at the time of the donation. If you bought a $100 pair of shoes but used it frequently and it’s in awful shape, it could carry a fair-value of $5. Perhaps if that same pair of shoes were gently used, it could carry a fair-value of $50-$70. The valuation can be subjective, but you should use your best, fair judgment. Sometimes, keeping in mind the resale value helps in determining the fair-market value.
