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2023 Year End Charitable Donations for Tax Filing

Posted by admin on December 7, 2023
Last modified: December 7, 2023

Planning your 2023 Year End Charitable Donations for Tax Filing

Towards the year’s close, many individuals are looking towards charitable donations as part of their financial strategy. From November to December, philanthropy takes center stage as people use this time to make donations that could prove essential for charities reliant on contributions from individual donors. The two months leading up to the end of the year is typically referred to as “the giving season,” and it provides a valuable opportunity for those wishing to give back.

The end of the year is often a time of generosity and showing appreciation for all that has been bestowed upon us. A survey conducted by Fidelity reveals that three out of five people plan to participate in philanthropic activities before the year’s end. Charitable giving is one such avenue for Americans to assist those with less luck.

To ensure the charity you select is authentic, verify it has obtained 501(c)(3) status from the Internal Revenue Service. This information can easily be found by consulting the IRS’s database of tax-exempt organizations or obtaining help from a PriorTax Tax Professional. In addition, many nonprofits will advertise their 501(c)(3) standing on their website or other publications.

charitable donation

Increasing Necessity for Charitable Donations

This year, the deficit is very significant due to the ongoing economic repercussions of COVID-19. Consequently, many unemployed individuals have sought assistance from food banks and other charitable organizations. Simultaneously, due to social distancing regulations, revenue has diminished for various entities that typically rely on in-person contributions, including faith groups and art organizations.

Making charitable donations may be a way to lessen your tax responsibilities, but there are alterations in the tax code that affect how these contributions are factored in. Here’s an overview of what you need to understand about the charitable donations tax deduction.

Charitable Donations in 2023

The Tax Cuts and Jobs Act of 2017 has enabled generous individuals to reduce their taxable income in 2018 through 2025 potentially. For cash donations, donors may be able to subtract up to 60% of their adjusted gross income (AGI) when giving to certain organizations. Additionally, those donating stock can enjoy a reduction of 30% off their AGI for such contributions.

Charitable donations by individuals are not limited to nonoperating private foundations; they can also include public charities and other private foundations. Should the qualifying cash contributions exceed the 60% ceiling for the given tax year of the donation, it may be carried forward to future years for up to five years.

Regarding charitable giving, it’s not only about the act of giving but also considering how that action fits into your tax strategy. As a reminder, the Internal Revenue Service (IRS) usually releases its annual inflation adjustments in the late fall for the upcoming year. It’s important to keep this information in mind when planning out your donations and other taxation decisions.

As the end of the year approaches, it’s a great opportunity for individuals to consider their tax situation and charitable giving. It is important to properly organize your charitable giving in order to maximize tax savings. Here are a few steps to consider when doing so:

Secure your Receipts

For those looking to get the tax deduction associated with charitable donations, it is important to make sure that you possess a receipt for all contributions. This applies no matter which form of donation you choose on December 31st, whether by cash, check, credit card, or even non-cash items such as clothing and furniture. Unfortunately, any kind of anonymous giving like coins thrown into a collection bucket does not qualify. It is essential to have proof to be able to use the donation as an offset on your taxes when filing with the IRS.

Check the charity’s policy before you load up the trunk.

When looking at eligible donations for tax deductions, the condition of the items is a significant element. The IRS does not indicate any specific prices related to the quality of the items, but charities do. Additionally, there are other regulations stipulated by the IRS concerning such donations. During the 2020 pandemic, many organizations ceased accepting physical goods as gifts; however, some have restarted retaking them. Be sure to confirm with your desired charity before delivering any goods.

Itemize your Charitable Donations for Tax Filing 

The government’s tax code makes a significant change for 2023, with the cash deduction rising to 60% from 50% while also increasing the standard deduction for married couples filing jointly to a total of $27,700. However, itemizing these deductions has become more difficult, and limits have been placed on how much homeowners can deduct in terms of real estate taxes and mortgage interest.

The combined total deduction rate for income, state, and property taxes has a maximum of $10,000. Because of these changes, it is now more difficult to surpass the standard deduction threshold in any given year through charitable contributions alone. Sax revealed that couples who take full advantage of the $10,000 state and local tax deductions and lack mortgage interest would have to donate at least $15,900 to itemize their deductions.

When filing your taxes, you can only claim a charitable donation deduction if you decide to itemize. To qualify for itemizing, add up all of your deductible expenses and make sure they exceed the standard deduction set by the IRS for 2023.

Taxpayers seeking to itemize their deductions in 2024 should note the following amounts: single taxpayers and married couples filing separately can deduct up to $13,850; those who file as head of household have a threshold of $20,800, while married couples filing jointly and surviving spouses may itemize up to $27,700.

When it comes to itemizing deductions for the 2024 tax year, the specifics are as follows: those who file single or married filing separately must have an amount of more than $14,600; meanwhile, head of household taxpayers must surpass a figure of $21,900; lastly, married filing jointly and surviving spouses need to be above $29,200.

Bunching Donations for Maximizing your Tax Refund

He advised those who were philanthropic and had the means to do so to bunch their donations. This would mean combining two years’ worth of charity contributions through money or stock giving. Doing this could help the donor slip into a lower tax bracket.

Qualified Charitable Distributions (QCD).

Retirees who don’t need their IRA funds can take advantage of the Individual Retirement Account (IRA) Charitable Rollover, which allows them to make tax-free contributions of up to $100,000 directly from their IRAs. This is a qualified charitable distribution and simplifies the process for those interested in donating to charities.

Whenever your need advise with Charitable Donations for Tax filing, find your dedicated tax professionals at PriorTax to walk you trough from start to finish for free.

Charitable Donations Tax Deductible and Gift Tax Deduction

Posted by admin on May 4, 2022
Last modified: May 4, 2022

What to Know about the Gift Tax Deduction and Charitable Donations Tax Deductible and Under the Jobs Act and Tax Cuts

Here are some important things to know about taking a deduction for charitable gifts. Giving to charity can be one of the most rewarding ways of giving, and with the rise in the standard deduction, more people will be able to take advantage of this new law change.

The itemized deduction is being limited by the Tax Cuts and Jobs Act and you may want to consider doing the same. However, it may be more beneficial for some people to establish that a standard deduction will be taken instead. But remember, this new policy is only on the books until 2025, so you’ll likely want to check back in with an accountant in a couple of years.

The Tax Cuts and Jobs Act was a big change for tax deductions, but there is a good side: charitable donations are tax deductible up to 60% of AGI. The new law provides lots of incentives to give to charity, and it’s likely that you’ll choose to take advantage of the increased deduction. Here are some things you should know when donating gifts to charity.

donations tax deductible
donations tax deductible

To Maximize Tax Return from Charitable Donations can be itemized Tax Deductions.

According to the Tax Cuts and Jobs Act, the standard deduction increases from $6,350 ($12,700 married filing jointly) to $12,000 ($24,000 married filing jointly). So, for many taxpayers – maybe you – it will make more sense to take the standard deduction than itemize with all of these changes. But don’t worry about it! If you input all your itemized deductions into e-file, TaxSlayer will automatically choose the best choice for you.

Not every donation counts towards your deduction to Maximize your Tax Return

A lot of people don’t realize this, but not all donations will count towards your donations tax deductible.

There are very specific guidelines to consider when it comes to deductions, and not every donation counts. Here are some guidelines:

-If you donate anything other than cash, you need to determine the Fair Market Value of those items.

– You cannot deduct for food items collected in a drive or given to a food pantry.

– If you donate items such as clothing or certain household supplies to an charitable organizations, you may take a deduction for the value of those things if they are in good, used condition, or better.

– If you participate in a charity run, don’t rush to deduct the cost of the race, travel, and accommodations. Your participation probably won’t count as a charitable donation unless it provides other tangible benefits to the charity.

Plan ahead for Charitable Donations to Maximize your Tax Return.

If you usually use the standard deduction, you can donate to charity and get a tax break. But if you make a significant donation this year, consider saving up that amount throughout the year. Then plan on donating it during a year when you also file a tax return. Overall with hopes to get full advantage of the 60% threshold deduction.

You may not be able to deduct your donations if you don’t itemize them. When taking the standard tax deduction, you can still totally donate to charity — even if it means you won’t get the tax break. But if you usually make a cash donation to your favorite organization, consider saving up your contribution amount over time. Then plan to make a large donation when you also itemize your deductions for a year. This could allow you to take advantage of the 60% threshold.

What if I don’t itemize my deductions? You don’t have to! You still have options! If you usually take the standard deduction and don’t itemize deductions in any given year, that doesn’t mean you can’t donate to charity. Keep in mind that donating means giving something from your own funds.

You need proof of the gift to claim it as an itemized tax deductible on your taxes. Therefore, it’s important to document your charitable giving for your records. If it’s worth $250 or more, you’ll have to ask for a document from the charitable organization stating what the gift was worth. This isn’t always necessary, but it is required when the gift is worth either $250 or more and, if it’s not worth $250, there are all sorts of other conditions which apply, so consult a tax accountant before moving forward with this.

Making a qualifying Charitable Donations for Tax Deductible is easy.

The IRS has a handy-dandy tool that determines what your donations are worth, so all you need to do is enter in the total amount of your gift, and it will tell you the value. For example, if your gift was worth $250 or more, you’ll need to find paperwork from the organization stating the gift’s fair market value and whether or not you received any goods or services in return.

It used to be that you could only deduct up to 50% of your Adjusted Gross Income (AGI) for charitable donations. This year, the limit has increased to 60%. This change is a great incentive to donate to charity and you might want to take advantage of this increased limit.

Tax reform eliminated several tax deductible, but the standard deduction was almost doubled. What this translates to many of taxpayers is that it’s better for them to take the standard deduction instead of itemizing until 2025. If you’re not certain on which method will maximize your tax, don’t worry. You’ll input your itemized deductions when you e-file your taxes, and PriorTax will automatically choose the process that will give you the biggest refund.

How are Charitable Deductions Affected by the TCJA?

Posted by Manisha Hansraj on November 27, 2018
Last modified: November 27, 2018

Generosity has its perks, or rather its tax benefits.

Keep in mind, taxpayers are able to easily itemize once they exceed their standard deduction. This typically happens by taxpayers claiming charitable donations along with any expenses they have. It then becomes greater than their standard deduction. However, the standard deduction is twice the amount for 2017.

Due to the Tax Cuts and Jobs Act (TCJA), taxpayers who itemize may face some difficulties next year.

Read on to find out what you can do to be prepared for next year!

“Bunching,” a word that people can’t stop talking about.

If you’re surfing the web for information on charitable donations, you might run into the term, “bunching.” It may be confusing, so we’re here to clear it up for you. (more…)