Top 5 Mistakes When Claiming Charitable Donations and How to Avoid Them

Charitable donations are one of the most common tax deductions, but they’re also one of the most frequently messed up. I see the same mistakes year after year: missing receipts, wrong values, ineligible charities. The IRS is watching, and if you get it wrong, you could lose your deduction or even face penalties. Let’s walk through the top five mistakes and how to sidestep them.

Mistake #1: Not Getting a Proper Receipt

The IRS requires written acknowledgment for any single cash donation of $250 or more. For smaller cash donations, you still need a bank record or a written communication from the charity showing the date, amount, and name of the organization. Noncash donations of $250 or more also require a receipt describing the items. Many people think a canceled check is enough for a $500 donation, but it’s not. You need the charity’s letter.

To stay safe, ask each charity for a written receipt every time you donate. Keep a folder—digital or physical—for all your donation records. If you give through a donation box at a store, get a receipt from the staff. For online donations, save the confirmation email. It’s simple but crucial.

Mistake #2: Donating to an Ineligible Organization

Not every non-profit is tax-deductible. Only donations to organizations recognized by the IRS as 501(c)(3) public charities qualify. Churches, schools, and hospitals are usually safe, but many groups that sound charitable (like some social clubs, political organizations, or foreign charities) are not. If you’re not sure, use the IRS Tax Exempt Organization Search tool to check before you give.

For example, donating to a GoFundMe campaign for a sick neighbor is generous, but it’s not deductible unless the campaign is run by a qualified charity. Similarly, contributions to a person directly—like handing money to a homeless individual—are not deductible. Always verify the charity’s status.

Mistake #3: Overvaluing Noncash Donations

That old sofa you’ve been meaning to donate? The IRS wants you to report its fair market value, not what you paid for it. Fair market value is what a willing buyer would pay to a willing seller. For clothes and household items, the IRS generally requires them to be in good used condition or better. You can use thrift store prices as a guide, but be realistic.

For high-value items like art, jewelry, or collectibles valued over $5,000, you need a qualified appraisal. Even for items between $500 and $5,000, you must complete Section B of Form 8283. Overvaluing items is a red flag for the IRS and can trigger an audit. When in doubt, value conservatively. If you run a small business, keep separate records for business inventory vs. personal donations—mixing them up is a common error.

Mistake #4: Forgetting You Need to Itemize

This is the biggest one. Many taxpayers mistakenly claim charitable deductions on the wrong line or think they can take it as an above-the-line adjustment. You cannot. Charitable donations are only deductible if you itemize your deductions on Schedule A. If you take the standard deduction—which is higher for 2024—you get no tax benefit from your donations.

That doesn’t mean donating is pointless. But from a tax standpoint, you need to add up all your itemizable expenses (like mortgage interest, state taxes, and medical expenses) and compare the total to your standard deduction. If itemizing gives you a bigger deduction, then your donations matter. If not, they’re just a feel-good expense. To track all your expenses, a profit and loss statement for your business can help separate personal from business costs.

Mistake #5: Ignoring the Carryover Rules

You can only deduct charitable contributions up to a certain percentage of your adjusted gross income (AGI). The limit is generally 60% for cash donations, 30% for appreciated assets, and 20% for certain capital gain property. If you donate more than the limit, you don’t lose it. You can carry the excess forward for up to five years.

Many people forget to carry over their unused contributions. Keep a running log of your contributions and the amount deducted each year. If you had a high-income year and low-donation year, check your prior returns for unused carryovers. Also, note that the order of deduction matters—cash donations are deducted first. Planning your donations strategically over multiple years can maximize your tax savings.

How to Keep It All Straight

Good recordkeeping is your best defense. Create a dedicated folder for donation receipts, both cash and noncash. Use a spreadsheet to log the date, amount, organization, and description. For noncash items, take photos before you drop them off. If you donate to a charity that provides a thank-you gift (like a mug), you may need to reduce your deduction by the value of that gift.

Another tip: bundle your donations. Since the standard deduction is high, you might not itemize every year. Instead, consider making two or three years’ worth of donations in one year, then take the standard deduction in the other years. This is called “bunching” and can help you clear the itemization threshold.

Special Rules for Donating Appreciated Stock or Property

Donating appreciated assets like stocks, bonds, or real estate can be a powerful tax move. You get a deduction for the full fair market value (if held more than a year) and you avoid paying capital gains tax on the appreciation. But there are traps. If you donate property that has gone down in value, you can only deduct the lower fair market value—not what you paid. Also, for tangible personal property like art, if the charity uses it for an unrelated purpose (e.g., sells it immediately), your deduction may be limited to your cost basis.

To handle this correctly, get a written statement from the charity about how they intend to use the donated property. For stock, transfer the shares directly to the charity rather than selling them first. Selling first creates a taxable gain and reduces the deduction. Many brokerage accounts make this easy with a donor-advised fund. If you’re considering a large donation of stock, work with your tax professional to file Form 8283 correctly and, if needed, attach a qualified appraisal.

Common Audit Triggers for Charitable Deductions

The IRS knows that inflated or fake donations are common. They look for certain red flags: round-number contributions that don’t match your income, large noncash donations without proper documentation, and donations that are a high percentage of your AGI. If you claim a noncash donation over $500, you must file Form 8283. Over $5,000 and you need a qualified appraisal. Failing to attach the right forms can lead to an automatic disallowance.

Another trigger: donating to charities you’ve never heard of, especially those that pop up around disaster relief. The IRS cross-checks the charity’s tax-exempt status. If the charity isn’t eligible, your deduction is gone. Also, if you donate services or time—volunteer work—you can deduct out-of-pocket expenses like mileage (at 14 cents per mile for 2024) but not the value of your time. Keep a log of volunteer hours and expenses, including a letter from the charity acknowledging your work.

The best audit defense is paper. Keep every receipt, acknowledgment, bank record, and appraisal. If you’re audited, you’ll need to produce them. Don’t rely on memory—document as you go.

Frequently asked questions

Can I deduct a donation without a receipt if it’s under $250?

For cash donations under $250, you don’t need a written acknowledgment, but you must have a bank record (like a canceled check or credit card statement) or a written communication from the charity showing the date, amount, and the charity’s name. For noncash donations under $250, you need a receipt from the charity.

How do I know if a charity is qualified for tax-deductible donations?

Use the IRS Tax Exempt Organization Search tool available on irs.gov. Most churches, schools, hospitals, and public charities with a valid 501(c)(3) status qualify. Political organizations, candidates, and many foreign charities do not.

What is fair market value for donated clothing?

Fair market value is what a thrift store would charge for similar items in good used condition. Generally, it’s a fraction of what you paid. The IRS says items must be in good used condition or better unless they have a special value.

Do I need to itemize to claim charitable donations?

Yes. Charitable deductions are only available if you itemize deductions on Schedule A. You cannot deduct donations if you take the standard deduction. To benefit, your total itemized deductions must exceed your standard deduction amount.

What happens if my donation exceeds the AGI limit?

You can carry forward the excess deduction for up to five years. The carryover is subject to the same percentage limits in each future year. Be sure to keep records of the original donation and the amount used each year.