For most folks, charitable giving represents a double benefit. The primary purpose of giving is to support organizations that do great works in the community. It gives these groups a chance to continue and expand their services. In many cases, it also serves as a tax deduction for the donor. With changes in the tax code for 2019 filing, let’s take a look at what these changes mean.
As if Income Tax Filing for the 2019 tax year wasn’t complicated enough, there have been several changes to tax deductions for charitable giving. For many taxpayers, this won’t change much. For others, changes in the rules for charitable giving will mean changes in filing procedures, as well as changes in tax strategy going forward. Let’s take a look at what this means.
Charitable Giving Limits for the 2019 Tax Year
Generally speaking, you cannot take a deduction for more than 60% of your Adjusted Gross Income (AGI). Groups that are eligible for the 60% limit include hospitals, churches, educational institutions, and specific conservation groups. Other organizations may fall under the 60% requirement, as approved by the IRS.
For certain types of charitable groups, the limit is 30% of your AGI. These include private foundations, fraternal groups, veteran’s organizations, and other entities designated by the IRS.
How Do I Know What Organizations are Eligible?
The IRS has an excellent Tax Exempt Organization Search Tool on their site that you can view to determine if your deductions are eligible. We have listed some examples above, but the actual list is longer and much more comprehensive.
Do I Have to Do Anything Special to Claim These Deductions for Charitable Giving?
Well, In a sense, yes. To claim deductions for charitable giving, the taxpayer must itemize deductions instead of using the standard deduction. Your accountant or tax preparer can give you guidance here. You must file using the Form 1040, and you must complete a Schedule A for Itemized Deductions.
Keep All Your Receipts From Charitable Giving
If you give more than $500 to a charity, and it is in goods instead of cash, there is a particular IRS form you must fill out, Form 8283. Anytime you donate cash or material goods valued at over $250, you need written acknowledgment from the receiving organization. Even with smaller donations throughout the year, if you want to claim them on your taxes… keep the receipt. If the IRS challenges any of your donations, they will want to see the documentation.
Have Questions About Charitable Donations and Your Taxes?
At JStevens Accounting, we work on your behalf to make sure you claim every deduction to which you’re entitled. If you need help preparing your 2019 taxes or would like to start preparing for 2020 taxes, let’s sit down and chat. We’ll work with you to develop your best tax strategy going forward!