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Rules for Charitable Giving are Always Changing

A financial professional can help guide you through the maze of IRS rules!

Contributing to charities comes with tax implications.  Here’s are a few tax tactics to keep in mind when preparing your next year’s return, especially if you hope to lessen your taxes and itemize deductions on Schedule A. These deductions might include medical and dental expenses and unreimbursed employee business expenses –  and amounts given to charities.

What kind of donation will you make this year? The maximum you can deduct depends on whether you donate cash or property and on the type of charity, as defined by the Internal Revenue Service:

  • Public charities don’t pay private individuals, engage substantially in legislative activities or take part in any political activity;
  • Private operating foundations spend at least 85% of their adjusted net income or its minimum investment return on its exempt activities; and
  • Private non-operating foundations principally provide grants to other entities or to individuals for charitable or other exempt purposes.
The IRS Rules are Always Changing

In most years, your donations can be deducted up to 50% of your yearly income minus deductions, or adjusted gross income (AGI). And deductions for donations to certain groups such as veterans’ organizations, fraternal societies, nonprofit cemeteries and others often are deductible to an amount up to 30% of your AGI.

However, this year, the IRS put a temporary limit on charitable contributions, and this is expected to change yet again, so be mindful when donating.

The IRS website says:

“In most cases, the amount of charitable cash contributions taxpayers can deduct on Schedule A as an itemized deduction is limited to a percentage (usually 60 percent) of the taxpayer’s adjusted gross income (AGI). Qualified contributions are not subject to this limitation. Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income. A corporation may deduct qualified contributions of up to 25 percent of its taxable income. Contributions that exceed that amount can carry over to the next tax year. To qualify, the contribution must be:

  • a cash contribution;
  • made to a qualifying organization;
  • made during the calendar year 2021

Contributions of non-cash property do not qualify for this relief. Taxpayers may still claim non-cash contributions as a deduction, subject to the normal limits.”

Know Where You’re Donating

To whom do you want to donate? The IRS requires that you give to a qualified organization in the U.S. to claim a deduction. An organization merely claiming tax-exempt status doesn’t automatically make your donation deductible.

Many major charities fit the criteria, but be sure by double-checking your organization of choice is listed. Here’s the address to the IRS’s search tool for qualifying organizations:

Learn What You May Not Know

Some donations cannot be deducted, such as Bibles, gifts to individuals and donations to political parties or candidates. Services provided are also not deductible.

Among other fine points of deducting donations:

For deductible cash donations, the IRS requires standard documentation of a bank record, payroll deduction or written communication from the qualified organization. This communication must include the name of organization and the date and amount of contribution regardless of the amount donated.

For all donations (cash and property) more than $250, you must show the above documentation, plus a written acknowledgement of the donation’s amount and whether any portion of the donation was in exchange for goods or services.


These few reminders only skim the surface of charitable giving. Check with a financial professional to learn how to give in a way that also helps you.








Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

This information was current based on tax laws dated December 16, 2021.

This article was prepared by FMeX.


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