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Published 4:08 pm Friday, November 4, 2022
Charitable contributions of money or goods may entitle individuals (and businesses) to certain tax breaks. However, it’s important to note that there are rules concerning charity and tax deductions. According to NerdWallet, for the 2021 tax year, each person was eligible to deduct up to $300 without having to itemize, which meant couples filing jointly could deduct up to $600 in charitable donations, which is referred to as an “above the line” deduction. Generally speaking, the United States Internal Revenue Service enables people to deduct up to 60 percent of their adjusted gross incomes via charitable donations, but there may be limitations based on the type of contribution and the organization. For example, contributions to certain private foundations, fraternal societies and veterans organizations come with lower limits. Tax-deductible donations are those made to qualifying organizations in the year the tax return is filed, says the IRS. Qualifying organizations may include religious organizations and churches, 501(c)(3) charitable organizations, nonprofit volunteer organizations, civil defense organizations, fraternal societies, and educational institutions, among others. Donations that are not tax-deductible include cash gifts to individuals and political contributions. Rules may be complex, so it’s always best do discuss charitable donations with a certified public accountant for clarification.