As many taxpayers are aware, charitable contributions can be used as a deduction on your tax return. Below we will explore some of the criteria which allow a contribution to qualify and be deductible, as well as the different contribution options.
A charitable contribution is any donation or gift to a qualified organization which is made willingly and not for the purpose of receiving a service or anything else in return.
Qualified organization can be various types of nonprofit organization. This can include those that are religious, educational or scientific.
Charitable contributions are reported on a Schedule A, in the deductions section of your personal tax return. Usually, they can only be used when itemizing deductions, not when using the standard deduction.
Someone who donates a property to a qualifying organization, can usually deduct the fair market value (or FMV) of the property. The FMV is calculated at the time of the donation.
There are often limitations to the percentage of the contribution that can be deducted. Generally, it is limited to 60% of your adjusted gross income, but it can be limited to 20%, 30% or 50% depending on your tax situation.
A qualified charitable one-time election is when one chooses to make a one-time distribution from a retirement account. The distribution can be up to a sum of $53,000 and it must be donated through a charitable remainder trust, or other specific trusts that are funded only by qualified charitable distributions.
