A Guide to Charitable Donations & Tax Deductions

As the year wraps up, many of us think about giving back to the causes we care about. If you're one of them and you itemize your deductions, you might be able to deduct those charitable donations. But it's not always straightforward—there are specific rules and limitations you need to follow to make sure your generosity pays off at tax time.

To claim these valuable deductions, you need to have the right paperwork. Let's break down what you'll need.

Cash Donations

For any cash donation, you'll need one of two things to prove your gift. The document must show the charity's name, the date, and the amount.

1. Bank Records: This includes bank statements, receipts from electronic fund transfers, canceled checks (images of both sides work), or credit card statements.
2. Written Confirmation: A letter or email from the charity confirming your donation is also sufficient. A blank pledge card won't cut it.

For cash donations of $250 or more, you'll need an additional document: a Contemporaneous Written Acknowledgement (CWA) from the charity. This document must include:

• The amount you donated.
• A description and good faith estimate of the value of anything you received in return for your donation (like a ticket to an event).

A single letter or email can serve as both your written confirmation and your CWA. To be "contemporaneous," you must get this document before you file your tax return for that year (or by the extended due date, whichever comes first).

Donating through payroll deduction? You can prove your donations with a W-2 or pay stub showing the amount withheld, along with a pledge card from the charity. If a single payroll donation is $250 or more, the pledge card must also state that you didn't receive any goods or services in return.

Noncash Donations

The rules for noncash items (like clothing, furniture, or stock) depend on their value.

• Less than $250: You need a receipt from the charity with its name, address, the date, and a detailed description of the items.
• $250 to $500: You'll need a CWA that includes a description of the item (but not its value).
• Over $500 but not more than $5,000: You'll need a CWA and must also complete and file Section A of Form 8283. This form describes the property, its fair market value, and how you determined that value.
• Over $5,000: This requires all of the above, plus a qualified appraisal of the property. You'll also need to file Section B of Form 8283, signed by the appraiser and the charity.

Keep in mind: Special rules can apply for donations of vehicles, art, and certain securities. However, you typically don't need an appraisal for donations of publicly traded securities.

What's Changing in 2026?

The One Big Beautiful Bill Act (OBBBA) is set to shake things up in 2026. Here are two key changes:

1. A New Deduction for Non-Itemizers: If you don't itemize, you'll be able to deduct up to $1,000 in cash donations ($2,000 for joint filers).
2. A Floor for Itemizers: If you do itemize, your charitable deductions will only count after they exceed 0.5% of your adjusted gross income (AGI). For example, with an AGI of $100,000, the first $500 you donate won't be deductible.

Planning your giving strategy around these new rules can help you make the biggest impact.

Giving for the Right Reasons

Let's be honest—most people donate because they want to support a cause they believe in, not just to save on taxes. But knowing the rules can help you give more generously. Making sure you have the right documentation is key to getting the deductions you deserve.

Feeling unsure if your donations are properly substantiated? That's what we're here for. At SD Mayer, we help you make sense of the complexities so you can focus on what matters. Contact us today, and let's get your financial strategy aligned with your charitable goals.