Tips: Tax Deductible Donations for Charity

Tax Deductible Donations

Rules for Giving to Charity, How to Get a Deduction & 3 Tips to Save

Donate, document and don’t forget the little stuff.

cover charity tax deductible

 

Tax deductible donations are contributions of money or goods to a tax-exempt organization such as a charity. Tax deductible donations can reduce taxable income. To claim tax deductible donations on your taxes, you must itemize on your tax return by filing Schedule A of IRS IRS Form 1040 or 1040-SR.

For the 2020 tax year, there’s a twist: you can deduct up to $300 of cash donations without having to itemize. This is called an «above the line» deduction. In 2021, the deduction rises to $300 per person rather than per tax return, meaning a married couple filing jointly could deduct up to $600 of donations without having to itemize.

How much can I deduct?

In general, you can deduct up to 60% of your adjusted gross income  via charitable donations (100% if the gifts are in cash), but you may be limited to 20%, 30% or 50% depending on the type of contribution and the organization (contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations come with a lower limit, for instance). IRS Publication 526 has the details.

  • The limit applies to all donations you make throughout the year, no matter how many organizations you donate to.
  • Contributions that exceed the limit can often be deducted on your tax returns over the next five years — or until they’re gone — through a process called a carryover.
  • For the 2020 tax year, you can deduct up to $300 of cash donations on a tax return without having to itemize. This is called an «above the line» deduction. In 2021, the deduction rises to $300 per person rather than per tax return, meaning a married couple filing jointly could deduct up to $600 of donations without having to itemize.
  • The CARES Act eliminated the 60% limit for cash donations to public charities.

 

if you need more information about how to deduct charities on your 2020 taxes, call Medeiros Souza at 407-326-8484 to book an appointment!