What does Charitable Contribution mean?
A charitable contribution is a gift of money or property to an organization that can then be taken as an itemized deduction by the taxpayer. Taxpayers cannot benefit from charitable contributions unless they elect to use itemized deductions on their tax returns. In addition, for a gift to be considered a charitable contribution for income tax purposes, the gift must be made to a qualified organization as defined by the Internal Revenue Service.
A taxpayer may deduct charitable contributions only to the extent that they exceed any value given to the taxpayer in return for the contribution. If the charitable contribution exceeds certain thresholds, the taxpayer must provide proof of the contribution. In the case of noncash contributions, this may include an appraisal as to the fair market value of the items.
Charitable contributions of cash can be made in an amount of up to 50 percent of adjusted gross income. Any charitable contribution that cannot be deducted in the current tax year can be deducted over the following five tax years or until it is exhausted, whichever occurs first.