Can My Donor Take a Tax Deduction for In-Kind Donations?
By Charitable Allies
Your organization just found out it will receive a donation of new laptops for the office. Do you know what type of information to include in an acknowledgment? A board member just found out that the parking and meals he has been paying for on the nonprofit’s time may be deductible. What type of information should be on his tax receipt? Can he take a tax deduction for an in-kind donation? Tax deductions for in-kind donations can be a tricky area of nonprofit tax law to navigate. Let’s walk through a few examples to highlight when donors can (and cannot) take a tax deduction.
Generally, a donor may deduct an in-kind (or, non-cash) donation as a charitable contribution. And a donor must obtain a written acknowledgment from the charity to substantiate the gift, although the acknowledgment will generally not assign a dollar value to the donation.
Not only are the written acknowledgment requirements complex, especially for non-cash donations, but noncompliance can be costly (generally $10 per contribution).
In-kind donations generally fall into one of three categories: