A frequent question asked around the holidays is “How much can I give to charity this year?” While IRS does not limit how much you can give, they do place limitations on the tax benefits you can receive for such donations. Here are some quick facts about the amount of charitable donations you can deduct:
- The total deduction for cash donations generally can’t exceed 60% of your adjusted gross income. If it does, you may have to carry over excess deductions to the following year.
- Your contributions must be made to a qualified organization. This includes:
- A state or United States possession (or political subdivision thereof), or the United States or the District of Columbia, if made exclusively for public purposes;
- A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals;
- A church, synagogue, or other religious organization;
- A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions;
- A nonprofit volunteer fire company;
- A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services);
- A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes;
- A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.
- The charitable contribution must be made by the end of the year.
- Non-cash contributions to charities are limited to 50% of the fair market value.
To read more about charitable donations on the IRS website, visit https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions
Before changing the amount you are going to donate to charity, you may want to consider if this will put you over the standard deduction or not. If your itemized deductions total less than the standard deduction, then you will not receive any credit for your donations on your tax return.
If you have your taxes prepared with Clergy Financial Resources, we can estimate how much you can donate in a year and how it will impact your taxes as part of your annual tax projection. If you are interested in having your 1040 taxes prepared with us, visit our website at https://www.clergyfinancial.com/services/clergy-tax-preparation/ for more details.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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