What is the largest percentage of your income you can donate to lower your taxes?

Question

I will will owe the IRS a large sum of money this year due to an unusually large amount I will have earned. I want to give away as muchas I can up to the point it no longer benefits me tax wise. Anyone who can provide advice around these tax laws is truly appreciated.

Answer 1

No donation is a wise tax avoidance scheme, since you only get a reduction in your taxable income not a credit on your tax liability for the donation. So if you are in a 25% tax bracket you'll receive $250 in tax benefit for a $1,000 deduction. You'll still be out $750 net of the donation amount.

If you wish to donate for the good that it will do then by all means do so. But if your only motivation is the tax savings don't bother. You'll have more money in your pocket simply by paying the taxes on it and skipping the donation.

But to answer the question that you asked, there are 3 classifications of charitiable deductions, 50%, 30% and 20%. Those percentages are the percentage of your AGI that you may donate to each class and deduct them in the current tax year. Any excess must be carried forward to future tax years and written down until they are eliminated.

The rules and calculations can get tricky and a complete discussion is well beyond the scope of this forum. Get a copy of IRS Pub 526 http://www.irs.gov/pub/irs-pdf/p526.pdf and start reading up on it.

Answer 2

Romney's tax returns are complicated. He additionally documents returns distant places. Pres obama's tax return does not have tax havens interior the Caymans, Bermuda, or a Swiss account. I even have not seen his. I dont understand what Romney did interior the years till now 2010 on account that he wont tutor those returns. What his accountant did with the 2011 return grow to be to decrease his charitable deductions so his tax criminal accountability does not be under 13% on account that that he what he had stated on digital camera. If he's no longer elected he can bypass back and report an amended return then declare the the remainder of his charitable products for 2011 and finally end up paying from 9% to twelve% tax. Romney is had to tithe a minimum of 10% to the Mormon church. Thats why the church helps their individuals make distinctive money. Romney grow to be a Bishop interior the Church that's in all probability why he wont launch the different returns. He could be tax exempt.

Answer 3

For most items, 50% of your income - some types of donations have a lower limit. But realize that your taxes are only reduced by a percentage of what you donate - the % depends on your tax bracket. If for example you are in a 25% bracket, a donation of $10,000 would reduce your taxes by $2500, the other $75K would come out of your pocket. If you are in the highest bracket of 33%, that same $10K donation would reduce your taxes by $3300 at most - the rest would come out of your pocket.

Answer 4

Hello;

The IRS has different limits for different situations and type of
Donation. After reviewing them I think it will be helpful if you
visit the link below for detailed explanation of each limit:

http://www.irs.gov/publications/p526/ar02.html#d0e2990

You will see that this is part of a very detailed IRS Publication 526 - Link which is as below:
http://www.irs.gov/publications/p526/ar02.html

Hope this helps.
-N

Answer 5

Ordinarily, 50%. This percentage would have to go to recognized charities like your church, university or Red Cross. Contributions to private foundations are more limited.