IRS Limits on Charitable Income Tax Deductions

By Fraser Sherman
IRS Limits on Charitable Income Tax Deductions

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If you donate to charity, it can be good for you as well as the people you help. If you itemize your tax deductions, you can deduct the donations you make to qualified organizations from your taxable income. The IRS sets limits on how much you can deduct, a limit that varies with your income and the type of organization you gave to.

Size

Even if you can afford to give most of what you earn to charity, the IRS won't let you deduct it. The maximum you can deduct in a given year is 50 percent of what you made, the IRS states; if your income rises above a certain level -- $166,800 in 2009, for instance -- the percentage you can deduct will be lowered.

Types

The IRS may limit the size of your deduction further depending on what classification of charitable organization you donated to. "50 percent limit organizations," according to the IRS, include churches, schools, hospitals and charitable groups; veterans organizations, fraternal societies and private cemeteries, on the other hand, are "30 percent" groups. That means the maximum deduction you can claim is 30 percent of your income. The IRS website provides formulas for calculating the deduction if you give money to both kinds of organizations during the year.

Considerations

You can claim a deduction for more things than just the checks you write to qualified groups, the Kiplinger financial website states. If you bake cookies for a school fund-raiser, for instance, you can deduct the cost of the ingredients; if you donate clothing, furniture, a car or other kinds of property, you can claim a deduction for the value of the donation. You can also deduct any mileage you spend driving to make a donation. The IRS will not, however, allow you to claim any deductions for time or services that you donate other than mileage.

Calculations

The IRS website provides guidelines for setting the value of property donations. Old clothing is usually worth no more than the charity sells it for; cars are worth roughly the sale price you find in a used-car guide, reduced for any major defects or problems; real estate is worth its current fair-market value. To claim full value on some items, such as antiques or jewelry, you might have to get them appraised first.

Time Frame

If you donate more money than you can deduct, that doesn't mean you lose the benefits. The IRS generally allows you to claim the donation as a deduction the following year, up to the 50 percent or 30 percent limit, and if there's still some money left to deduct, you can repeat the process for the four years after that. If you can't write the donation off your taxes in five years, whatever's left expires.

Prevention/Solution

If you're ever audited, the IRS will expect you to provide records for any charitable deductions you claim. If you donated cash, you'll need to provide receipts; if you donate property, you'll need a statement from the charity stating what you gave them. If a donation is more than $250, you'll need a more detailed written acknowledgment from the organization confirming your claims.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.