IRS Clarifies Rules for Tax-Deductible Charitable Gifts

The Internal Revenue Service issued guidance clarifying which organizations qualify for tax-deductible donations and detailing the receipts and records donors must retain to support those deductions.

The guidance identifies entities that normally qualify for deductible contributions as organizations recognized under Internal Revenue Code section 501(c)(3), certain government entities, and other groups the IRS has designated as tax-exempt for charitable purposes. Gifts to foreign charities generally do not qualify for U.S. deductions unless the organization has U.S.-recognized tax-exempt status. The guidance directs donors to confirm a recipient’s status using the IRS’s searchable online database of tax-exempt organizations before claiming a deduction.

On documentation for cash contributions, the IRS reiterates that taxpayers must keep a bank record such as a canceled check, credit card statement or payroll deduction record. For any single contribution of $250 or more, taxpayers must obtain a contemporaneous written acknowledgment from the charity that states the amount donated and whether any goods or services were provided in return. Smaller cash gifts without a written acknowledgment require the bank or payroll records described above.

The guidance outlines rules for noncash gifts. Taxpayers must file Form 8283 when the total deduction for noncash property claimed on a return exceeds $500. For individual noncash donations with a claimed value over $5,000, taxpayers must obtain a qualified appraisal and provide specific supporting documentation. Donated clothing and household items must be in good used condition or better to qualify for a deduction, and charities are expected to provide receipts describing donated items when requested.

For donated vehicles, boats and airplanes, the guidance explains different substantiation paths. If a donor claims a deduction based on the organization’s sale of the donated vehicle and the sale proceeds exceed $500, the donor generally must obtain a written acknowledgment from the organization, commonly Form 1098-C, that includes the sale price and other required information. If the charity uses the vehicle for its own charitable purposes rather than selling it, the organization’s written statement must describe how the property was used.

The IRS addresses gifts made through third-party payment processors and crowdfunding platforms. A donation made through a platform is deductible only when the recipient is a qualified organization and the donor can document the gift according to standard substantiation rules. Payments routed to individuals or informal funds for which the platform does not provide the necessary acknowledgment are not deductible.

The guidance restates existing limits and filing norms and does not change deduction ceilings or percentage-of-income limits. The IRS warns that failure to obtain required acknowledgments or keep proper records can result in disallowed deductions during an examination. Taxpayers claiming charitable deductions should retain acknowledgments, bank records, receipts, appraisals and Form 8283 filings for the period necessary to support the return. Those unsure about a recipient’s status or the documentation required for a complex or large gift are advised to use the IRS tax-exempt organization search and consult a tax professional before claiming the deduction.