Donating all of those cans to the food pantry won't just relieve the headache from the rattling in your trunk. It can also save you money with a tax deduction. However, Uncle Sam doesn't always let you write off the fair market value of food donations, especially if you don't keep the required records. You also have to deal with a qualified charity. If you have questions about that, you'll need to check out the charity's status with the Internal Revenue Service before you make the donation.
Your donation deduction is limited to what you paid for the food unless you hold it for more than one year. The IRS doesn't allow you to increase your deduction for increases that would be treated as ordinary gain if you sold the item. For example, if canned pineapple is usually $1.50, but you get it on sale for $1 and then donate it to charity, you can only claim a $1 deduction. If you had sold the pineapple for $1.50, your 50 cents of gain would be ordinary gain so you can't include it in your deduction.
There's a way a tax claim for food bank donations can cost you money. If you make a claim for any charitable donation, you must itemize your taxes. That only makes sense if your total of itemized deductions exceeds your standard deduction. Let's say your donation consisted of a few cans of soup. If you don't have any other significant itemized deductions, those cans won't make much of a dent in your tax liability. You're better off doing the standard deduction since you'll get more money back.
Charitable Donation Limits
Donations to food banks are generally subject to a 50 percent limit. That means all of your charitable donations put together can't exceed 50 percent of your adjusted gross income for the year. It drops to 30 percent if the food bank is run by 30 percent limit organization, such as a fraternal organization.
Provide Your Proof
The IRS usually expects you to serve receipts with most food bank deduction claims. However, it does make exceptions for donations under $250 if getting a receipt isn't reasonable, such as if you drop off the food at an unmanned drop site. When practical, even if your food costs less than $250, the receipt must include a description of the donation, the name of the food bank, and when and where it was made. If you claim the cost was between $250 and $500, the receipt must also say if you received anything in return.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."