Tax Rules for In-Kind Services & Donations

"In-kind" donations to charity include everything from giving away your car to building a Habitat for Humanity home. Cash donations are straightforward: You give money, you claim a deduction. When you give something other than cash, figuring out how much you can deduct -- or if you can claim any deduction at all -- becomes more complicated.

Service

If you donate time and effort to charity -- running an auction, delivering food, building a house or giving blood -- your only reward is the good that you do, because you can't write off your donation. Even if you take time off from work, the lost income is not deductible. You can, however, claim related expenses such as a per-mile deduction for driving to the place where you donated your time. If the charity reimburses your expenses, you can't claim them.

Property Donations

If you make a non-cash donation -- free use of your rental for a weekend, your old computer, food -- you claim the fair market value of the property as a deduction. For household items, such as clothes or furniture, the property must be in good condition for you to claim a deduction. With more valuable items, such as an antique pendant, you need an appraisal to prove it's worth the amount you claim.

Records

If you know you're going to claim a deduction, keep the paperwork to support it. If you claim travel to and from a charity event, record the mileage and the reason for the trip. When you donate property, get a receipt with a reasonably detailed description of the property. The more generous your in-kind donation, the more paperwork you need. For a donation of property worth more than $500, for instance, you need to note when and how you came into possession of the property in addition to your receipt.

Deducting

To write off your contributions, you have to itemize deductions on Schedule A rather than take the standard deduction. Before claiming the deduction, subtract any benefit you received from the charity, such as a thank-you gift for your help. No matter how generously you give, you can't claim a total deduction greater than 50 percent of your total income. In some cases you can only claim 30 percent or 20 percent, depending on the kind of organization you donate to.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.