What are the IRS Charitable Contribution Limits?
The amount of charitable contribution that can be deducted is limited by certain tax laws. The charitable contribution deduction allowed for any one year is based on the taxpayer’s adjusted gross income (AGI) Also, the amount of charitable contributions an individual can deduct in any one tax year is limited depending on the types of organizations to which the contributions were made, the kinds of property contributed, and the amount or value of the donated property.
Charitable contributions are deductible as itemized deductions
Charitable contributions are deductible as itemized deductions. Thus, a taxpayer’s total itemized deductions must be greater than the standard deduction to generate tax savings from a gift to charity. The amount of charitable contributions an individual can deduct in any one tax year is limited depending on the types of organizations to which the contributions were made, the kinds of property contributed, and the amount or value of the donated property.
Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.
What is the 50% limit imposed on certain types of charitable contributions?
The first 50% charitable contribution limitation provides that all deductible contributions cannot exceed 50% of AGI. Excess contributions are carried over to the next five tax years. All current-year contributions are deducted first.
The second 50% limitation refers to gifts to certain types of charitable organizations that are considered first in computing the overall 50% limit. The most common 50% charities include churches, schools, hospitals, governmental entities, private operating foundations, and other nonprofit agencies organized for charitable, religious, educational, scientific, or literary purposes.
What are Qualified Charities for IRS purposes?
You may deduct a charitable contribution made to, or for the use of, any of the following organizations that otherwise are qualified under section 170(c) of the Internal Revenue Code:
A state or United States possession (or political subdivision thereof), or the United States or the District of Columbia, if made exclusively for public purposes;
A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals;
A church, synagogue, or other religious organization;
A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions;
A nonprofit volunteer fire company;
A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services);
A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes;
A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.
Most, but not all, charitable organizations qualify for a charitable contribution deduction.
You can deduct contributions only if they are made to or for the use of a qualified recipient. No charitable contribution deduction is allowed for gifts to certain other kinds of organizations, even if those organizations are exempt from income tax. Contributions to foreign governments, foreign charities, and certain private foundations similarly are not deductible. Below, you can view a list of organizations for which your donations can be deducted. All organizations rated by Charity Navigator qualify for charitable status, and you can deduct your donations, subject to certain limitations.
50 Percent Charitable Contribution Limit on Deductions
Tax laws and regulations could limit the deductibility of charitable gifts based on several factors, including the donor’s income, the type of gift made, and the type of organization to which the gift is made. Remember, you may deduct a charitable contribution made to, or for the use of, any of the following organizations that otherwise are qualified under section 170(c) of the Internal Revenue Code. It is important to make sure you are making a donation to a charity that is qualified by the IRS or else you may not be able to make a deduction for your charitable contribution. If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property. If the property has appreciated in value, however, some adjustments may have to be made.
Charitable Donation to Foreign Charity
The organizations listed in this publication with foreign addresses are generally not foreign organizations but are domestically formed organizations carrying on activities in foreign countries. These organizations are treated the same as any other domestic organization with regard to deductibility limitations.
Certain organizations with Canadian addresses listed may be foreign organizations to which contributions are deductible only because of tax treaty. For these organizations, in addition to the limitations on the amount of the deduction allowed by section 170 of the Code, the deduction may not exceed the amount allowed as a deduction under Canadian law computed as though the taxable income (in the case of a corporation) or adjusted gross income (in the case of an individual) from sources in Canada is the aggregate income. A deduction for a contribution to a Canadian organization listed in this publication is unallowable if the contributor reports no taxable income from Canadian sources on the United States income tax return.
Except as indicated above, contributions to a foreign organization are not deductible.