Charitable Contributions Deduction
One of the itemized deductions available for taxpayers who donate to charity. This applies the majority of charities receiving the donations, including all public charities, all private operating foundations, and certain private foundations that distribute the contributions they receive to public charities and private operating foundations within 2-1/2 months after the year of receiving the donations. The Charitable Contributions Deduction allows taxpayers to deduct all of their contributions to qualifying charitable contributions of cash and property within certain limitations. Some of the acceptable charities include: A trust, a community chest, or a foundation created in the United States or its possessions, that’s organized and operated exclusively for scientific, religious, charitable, literary or scientific purposes. The Charitable Contributions Deduction allows taxpayers who make substantial charitable gifts and take sizeable tax deductions for the year in which their donations are made.
DEFINITION of Charitable Contributions Deduction
One of the itemized deductions available for taxpayers who donate to charity. The Charitable Contributions Deduction allows taxpayers to deduct all of their contributions to qualifying charitable contributions of cash and property within certain limitations. These deductions must be listed on Schedule A of the 1040.
BREAKING DOWN Charitable Contributions Deduction
The Charitable Contributions Deduction allows taxpayers who make substantial charitable gifts and take sizeable tax deductions for the year in which their donations are made. The rules for deducting these gifts can be complicated in certain instances. Taxpayers with questions about the deductibility of their gifts should download the instructions for Schedule A off of the IRS website.
In order to deduct charitable contributions, the recipient charity must be a qualified organization under section 170(c) of the Internal Revenue Code. Some of the acceptable charities include:
Limitations on Deductions
The IRS imposes caps on the total value of charitable contributions that may be tax deductible in a given year--typically 50 percent of a taxpayer’s adjusted gross income. This applies the majority of charities receiving the donations, including all public charities, all private operating foundations, and certain private foundations that distribute the contributions they receive to public charities and private operating foundations within 2-1/2 months after the year of receiving the donations. A 30 percent limit is imposed on contributions made to certain veteran’s organizations, fraternal groups and cemeteries.
Related terms:
501(c)
501(c) is a designation under the United States Internal Revenue Code that confers tax-exempt status to nonprofit organizations. read more
501(c)(3) Organization
A 501(c)(3) organization is a tax-exempt non-profit organization. Learn the requirements, costs, and pros and cons of setting up a 501(c)(3). read more
Charitable Donation
A charitable donation is a gift of cash or property to a non-profit organization. American taxpayers can deduct such donations up to an annual cap. read more
Donor-Advised Fund
A donor-advised fund is a private fund administered by a third party, created for managing charitable donations on behalf of an organization, family, or individual. read more
Federal Income Tax
In the U.S., the federal income tax is the tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities. read more
IRS Publication 78
IRS Publication 78 is a document that is published by the Internal Revenue Service (IRS). The document lists organizations that qualify to receive tax-deductible contributions. read more
Philanthropy
Philanthropy is charitable giving by individuals and organizations to worthy causes. Philanthropy includes donating money, time, and other forms of altruism. read more