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!
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. (more…)