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What are the limits on deductions for charitable contributions?

Posted by on December 23, 2014
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What are the limits on deductions for charitable contributions?

It’s great to give but don’t expect all of it back from the IRS!

If you plan on deducting a charitable contribution on your tax return, you’ll want to keep in mind that the IRS places limitations on how much you can actually write off.

Generally, you’ll be able to deduct charitable contributions up to 50% of your Adjusted Gross Income (AGI). However, this is not always the case.

In fact, depending on the organization you donated to and what you donated could alter this limit to 30% or even 20% of your AGI.

If you want to receive the maximum refund possible, learn the limitations before donating. Then, when it’s time to file your taxes, PriorTax will do the calculations for you!

50% Limit

The total amount of charitable contributions you can deduct on your taxes cannot exceed 50% of your Adjusted Gross Income.

In other words, if you made $80,000 during the year, then you’ll be able to include up to $40,000 in contributions in the deductions section of your tax return.

However, not everything you donate nor every organization you donate to is included in this 50% limit. Before donating to a charity, you may want to ask the organization if they are an IRS Qualified Charity and whether or not they’re considered a “50% Limit Organization”.

If they fall into both categories, you’ll be able to deduct up to 50% of your income in cash contributions you made to the organization.

The following types of organizations are 50% limit organizations;

  • churches and associations of churches
  • education organizations (with a faculty, curriculum and enrolled student body)
  • hospitals (and their medical research organizations)
  • publicly supported charities
  • private operating foundations
  • the United States or any state

30% and 20% Limitations

As mentioned, you can not deduct 50% of your income from all contributions made to organizations falling within the list above. Some contributions to other organizations are limited to as little as 30% limit.

The following types of organizations are included in the 30% limit:

  • veterans’ organizations
  • fraternal societies
  • nonprofit cemeteries
  • certain private non-operating foundations

However, there’s two types of situations that would further limit the amount of contributions you can deduct to 20% of your AGI:

  • if you donate property that’s considered a capital gain
  • if you receive something in exchange for your contribution to a qualified charity

In other words, if you’re not donating cash, you’ll only be able to include your contributions up to 20% of your Adjusted Gross Income. For example, if you donated land to a nonprofit cemetery, and your AGI is $100,000, you would only be able to deduct up to $20,000 in land contributions.

PriorTax will do the tax calculations for you!

Consider it good karma or a good deed well done. With Priortax, you won’t have to bother trying to calculate the contributions you made over the past year. Instead, just enter the amounts you donated and who you donated to. The PriorTax application will do the rest for you!

We would hate to see you leave extra refund money on the table. PriorTax will make sure you receive the maximum refund possible!

So what are you waiting for? Create an account today!

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