Donating food to a food bank can be deducted from your taxable income as a charitable donation. Donating food can help more than feeding the hungry. It can also add a little extra to your wallet.
Charitable donations are generally tax-deductible if you give an approved charity tax exemption. Qualifying food donations are eligible for an income tax deduction by the Internal Revenue Service (IRS). To maximize your deductions, it helps to know the rules in advance.
Food Donation Tax Obligation
If you donate the food to a recognized non-profit organization, you can deduct it from your taxable income. Religious organizations, non-profit charitable organizations, and non-profit hospitals exemplify qualified charities.
You can search the IRS online database to determine if an organization is eligible. You can’t deduct the donation if you give it to a non-qualified individual or organization. You can, however, write off cash donations you make to charities to help them pay for food or other expenses.
You can only deduct the cost of food when you donate it. It means that you must keep the food for at least one year before you donate it. You can only include gains on food donations if they result in long-term capital gains.
Deductions for Charitable Donations
Since 1969, the general rule has been that taxpayers who have contributed appreciated inventory or other income property are allowed a charitable deduction for an amount equaling the taxpayer’s basis in the property and not its fair market price.
Contributions to charities can generally be deducted up to 50% of adjusted income, excluding net operating loss carrybacks. However, contributions to private foundations, veterans’ organizations, fraternal societies, and cemetery organizations are restricted to 30% of adjusted gross income, calculated without considering net operating loss carrybacks. These limitations are indicated by the Tax Exempt Organization Search using deductibility status codes.
You will need a receipt from your charity to document the donation. The receipt must include the name of the charity, the date, and your donation description. It should also indicate whether you were compensated for it.
How to Report a Food Donation
It would help itemize your deduction using Schedule A from the IRS 1004 tax form. Depending on other itemized deductions, giving up your standard deduction may not make sense to claim your food donation.
You can itemize your food donation by reporting it along with any property donations on line 17 of Schedule 1. You don’t need a tax write-off form to donate food. However, if your donation is not cash or check and has a value of more than $250, you will also need to complete IRS Form 82883 to claim it.
Once you have accumulated all your itemized deductions, copy the total to line 40 on your 2017 Form 1040 tax return.
A tax deduction has nothing to do with the grace you will receive from donating. Don’t allow it to stop you from sharing your blessings. Contact Second Harvest of the Greater Valley to ensure that your donations will not be wasted and reach the right hands.