Quick overview
Mistakes when claiming charitable donation deductions commonly come down to three areas: documentation, valuation, and eligibility/limits. These missteps can cause denied deductions, delayed refunds, or audit scrutiny. Below I explain the frequent errors I see in practice, how to avoid them, and where to go for IRS guidance (see IRS Publication 526 and the Tax Exempt Organization Search).
Checklist: What to collect before you file
- Written acknowledgement for any single gift of $250 or more (must state amount and whether you received goods or services) — see IRS rules on substantiation (IRS Publication 526).
- Bank records, payroll deduction records, or credit-card statements for cash gifts under $250.
- Form 8283 for noncash donations when the total for a tax year exceeds $500; a qualified appraisal and signature may be required for property over $5,000.
- Photos and a reasonable method for valuing household items (use fair market value, not replacement or resale estimates).
- Proof of transfer for appreciated securities (broker statement showing donation date and shares gifted).
I maintain a simple spreadsheet for clients with columns for date, charity EIN, amount/value, acknowledgment, and supporting file links — this habit prevents most problems.
Documentation mistakes (the single biggest cause of denied deductions)
Common errors:
- No written acknowledgement for contributions of $250+.
- Using vague or incomplete receipts that lack the charity’s name, date, or description of donated property.
- Relying on a charity’s website screenshot or a generic event ticket without a receipt that documents the deductible portion.
What the IRS requires: A written acknowledgement is mandatory for contributions $250 and above; for cash gifts under $250, a bank record or payroll statement is sufficient. For specifics, consult IRS Publication 526 and the IRS Charities & Nonprofits pages.
Internal resources: our piece on What Documentation You Need to Support Charitable Deductions explains required substantiation in detail. Also see Charitable Contribution Deductions: Documentation and Limits for an expanded checklist.
Valuation errors and over-claiming non-cash donations
People often overstate the fair market value (FMV) of clothing, furniture, and household goods. The IRS expects FMV — the price a willing buyer would pay and a willing seller would accept — not original cost or inflated resale estimates.
Examples of valuation pitfalls:
- Listing an item as “like new” with a high value without photos or a contemporaneous description.
- Claiming the full retail price for lightly used electronics or apparel.
Rules to follow:
- Take dated photos and list the condition of items at the time of donation.
- Use thrift-store resale guides only as a loose reference; document how you arrived at the FMV.
- If the total non-cash contributions exceed $5,000 for an item or group of similar items, the IRS generally requires a qualified written appraisal and must be reported on Form 8283 (see IRS Form 8283 instructions).
Misunderstanding limits and carryovers
Deduction limits depend on the type of property and recipient:
- Cash gifts to public charities: generally deductible up to 60% of your adjusted gross income (AGI) for most taxpayers (consult Publication 526 for specifics).
- Gifts of appreciated long-term capital gain property (like stock): often limited to 30% of AGI if given to public charities; other limits (20% or 50%) may apply depending on the recipient type and property.
- Excess amounts may be carried forward for up to five years.
These percentages can be confusing (and they change by property type and organization). When in doubt, run the numbers or consult a tax adviser — I routinely reclassify client gifts to avoid exceeding AGI limits and to preserve carryover opportunities.
Donor-advised funds (DAFs) and private foundations: special rules
A gift to a donor-advised fund or private foundation isn’t always treated the same as a gift to an operating public charity. Limits for deductions can differ, and if you recommend grants from a DAF to family-controlled entities you may lose deductibility.
Note: A contribution to a DAF is generally deductible when you irrevocably transfer the asset to the fund — but once in the fund, your future recommendations typically don’t affect deductibility. Always check the fund’s rules and IRS guidance.
Qualified charitable distributions (QCDs) from IRAs
For IRA owners age 70½ or older, a QCD lets you transfer up to $100,000 directly from a traditional IRA to a qualified charity and exclude that amount from taxable income. QCDs are not reported as charitable deductions but reduce taxable income. Rules and age requirements can be nuanced — confirm current law before using QCDs.
Filing errors and required forms
- Form 8283: Required when noncash contributions exceed $500 in total. Part B must be completed and include an appraisal for items over $5,000.
- Schedule A: Itemizers report charitable deductions here. If your total standard deduction is larger, itemizing solely for small gifts may not benefit you.
If you discover a mistake after filing, you can generally file Form 1040-X (amended return) within the IRS deadline to correct donation amounts and recover missed benefits.
Audit red flags and how to reduce risk
Red flags include:
- Large, round-number donations with little documentation.
- Repeated high-value non-cash claims without appraisals.
- Donations to organizations that aren’t qualified public charities.
To reduce audit risk: keep contemporaneous receipts, document valuation methods, and use third-party transfers for securities (broker-to-broker donations leave a clear trail).
Special categories: vehicles, marketplace gifts, and crowdfunding
- Vehicle donations: Rules for valuation depend on the charity’s use or sale of the vehicle. If the charity sells the vehicle, your deduction is typically limited to the gross proceeds reported by the charity.
- Marketplace and “round-up” donations: Use receipts and monthly statements to substantiate small, recurring gifts.
- Crowdfunding: Gifts to gofundme pages or individuals usually aren’t deductible unless they’re made to a qualified 501(c)(3) organization.
Practical tips from my work with clients
- Start a donation file in real time — digital scans of acknowledgements beat rummaging through old boxes.
- When donating securities, transfer shares directly from your brokerage account to the charity’s account to lock in the fair market value and avoid capital gains tax.
- For large non-cash gifts, get a qualified appraisal before filing — that protects you if the IRS questions value.
- Bunch smaller gifts into a single tax year if itemizing in alternate years (a strategy I coordinate for clients to exceed the standard deduction in select years).
Examples from practice
- Overvalued household goods: I saw a client claim $2,000 for used furniture when FMV was $300–$500. The issue was resolved by re-evaluating, submitting supporting photos, and amending the return to avoid penalties.
- Missing Form 8283: A donor gave valuable art but didn’t file Form 8283. We filed an amended return and included the required appraisal, preserving most of the deduction.
Resources and authoritative references
- IRS Publication 526, Charitable Contributions (current guidance and limits).
- IRS Tax Exempt Organization Search (verify a charity’s tax-exempt status).
- IRS Form 8283 instructions (for noncash donations).
See the IRS pages for full legal guidance (for example, Publication 526 at https://www.irs.gov/pub/irs-pdf/p526.pdf and the Tax Exempt Organization Search at https://www.irs.gov/charities-non-profits/tax-exempt-organization-search).
Also consult our related articles: “What Documentation You Need to Support Charitable Deductions” and “Charitable Contribution Deductions: Documentation and Limits” for deeper checklists and examples.
When to get professional help
If you’re donating high-value property, contributing through a donor-advised fund, or using QCDs, consult a tax professional. In my practice I find an early consultation eliminates costly mistakes and creates better tax results than fixing issues after filing.
Professional disclaimer: This article is educational and not individualized tax advice. Tax laws and IRS guidance change; always confirm rules with the IRS or a qualified tax advisor before taking action.
