How does the charitable giving tax deduction work?

Question

This issue sometimes comes up about giving at church and deducting it from personal taxes but I don't understand the whole concept.

Basically, the question is this. If a person gives their church (a qualified non-profit organization) a donation or offering, and the person reports the gift on their income taxes, does the IRS simply just not tax the amount that was given?

In other words, does the gift increase the amount of non-taxable income?

Then, secondly, what kind of supporting documentation would the IRS require to substantiate the claim. Churches don't normally give receipts for offerings taken during service.

Please state your qualifications if you have an informed answer. Thanks.

Answer 1

>>does the gift increase the amount of non-taxable income<<

No. It increases itemized tax deductions if the taxpayer itemizes.

>>what kind of supporting documentation<<

If the donation is under $250, the cancelled check would count as a receipt. If it is over $250, you would need written acknowledgement from the church. Beginning 1/1/07, if you donate cash and do not receive a receipt, no deduction can be claimed.

Charitable deductions are one of the itemized deductions on Schedule A along with home mortgage interest, state taxes, and medical expenses. Taxpayers can deduct either the standard deduction or their itemized deductions, whichever is higher. Generally speaking, as mortgage interest is usually the biggest deduction, unless you own a house and are paying a mortgage, your itemized deductions won't be high enough to get a tax benefit.

Some states (Minnesota for one) allow a partial deduction for charitable contributions even if you do not itemize.

Answer 2

The eligible donation is added to your other itemized deductions, then the total is subtracted from income before your taxes are calculated. So if you donate $1000 over the year, and are in the 15% bracket, your taxes will be reduced by as much as $150.

You can only get this benefit if you itemize, not if you take the standard deduction.

Documentation is required. Most churches send out an end of year statement to their members showing the contributions for the year. Under some circumstances you could use cancelled checks for a receipt - there are additional record-keeping requirements this year if you do it that way. If you just toss cash into the collection basket, then you can't deduct it.

Answer 3

You report your charitable giving on Schedule A - Itemized Deductions, and you can give both cash & non-cash, but if the non-cash is over $500, there is another form, Form 8283, that has to be filled out and included with your tax return. If your total itemized deductions (medical, state or sales taxes, real estate taxes, personal property taxes, mortgage interest, deductible points, investment interest, cash contributions, non-cash contributions, casualty/theft losses, misc itemized deductions) are more than your standard deduction, you get to deduct your itemized deductions instead of your standard deduction on your tax return. I have included a link to an irs publication about charitable contributions and what is new with them for 2007 taxes.

Answer 4

Obama is obviously restricting those deductions using fact he needs the donations to circulate down. Obama does no longer only like the loose marketplace to have a hand in fixing societies problems, like homelessness, and starvation. restricting deductions will insure that he ought to then blame the wealthy for no longer worrying using loss of charitable donations. it extremely is a grimy trick this is worth of a competent Chicago baby-kisser. human beings have short memories, and while those charities report donations down, Obama will declare that the government has to step in to resolve those problems.

Answer 5

this site should help explain

http://www.irs.gov/newsroom/article/0,,id=164997,00.html