The charitable contribution deduction allows taxpayers to deduct donations made to qualified charitable organizations from their taxable income, provided they itemize deductions on their tax return. This deduction encourages charitable giving by providing a tax incentive for taxpayers who support nonprofits, religious institutions, and other qualified organizations.
To claim the deduction, donations must be made to organizations that qualify under IRS Section 501(c)(3), including:
- Charitable, educational, religious, or scientific organizations.
- Public charities, foundations, and certain private foundations.
Taxpayers can deduct:
- Cash donations.
- Non-cash contributions, such as clothing, furniture, or vehicles, as long as they meet IRS guidelines for fair market value.
- Mileage driven for charitable purposes.
There are limits on the amount of charitable contributions that can be deducted, typically up to 60% of adjusted gross income (AGI) for cash contributions, with lower limits for donations of property. If contributions exceed these limits, they can be carried forward and deducted in future years.
Taxpayers should keep detailed records, including receipts or acknowledgment letters from the charity, to substantiate their donations in case of an IRS audit. Understanding the rules and maximizing charitable deductions can help reduce overall tax liability and support meaningful causes.