CHARITABLE GIVING
The Tuesday after Thanksgiving marks Giving Tuesday when many people choose to make charitable donations. People making charitable donations for Giving Tuesday, or at any time during the year, should review whether their gift is tax-deductible.
Tax Deductible
Most contributions of cash or property made to a charitable organization are deductible as an itemized deduction on Schedule A, Form 1040, Itemized Deductions. Generally, you'd itemize when the combined total of your anticipated deductions, including charitable gifts, add up to more than the standard deduction.
2022 Standard Tax Deductions
Single
$12,950
Married Filing Jointly
$25,900
Head of Household
$19,400
Cash Donations
Cash contributions include those made by check, credit card or debit card, as well as unreimbursed out-of-pocket expenses in connection with volunteer services to a qualifying charitable organization. When you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income.
Non-Cash Donations
Provided you've held them for more than a year, appreciated assets including long-term appreciated stocks and property are generally deductible at fair market value, up to 30% of your adjusted gross income.
There are some contributions that aren't tax deductible, including donations:
· Made to a supporting organization
· Intended to help establish or maintain a donor advised fund
· Carried forward from prior years
· Made to most private foundations
· Made to charitable remainder trusts
· Of time spent volunteering
Tax Exempt Organization Search Tool
As people are deciding where to make their donations, the IRS has a tool that may help. Tax Exempt Organization Search on IRS.gov (https://www.irs.gov/charities-non-profits/tax-exempt-organization-search) is a tool that allows users to search for charities. TEOS also provides information about an organization's federal tax status and filings.
Qualified Charitable Distributions
Taxpayers age 70 ½ or older can make a qualified charitable distribution (QCD) directly from their IRA, other than a SEP or SIMPLE IRA, to a qualified charitable organization. The maximum annual amount a taxpayer may exclude from income for a QCD is $100,000. When filing a joint return, the spouse can also have a QCD and exclude up to $100,000. Any QCD more than the $100,000 exclusion limit counts as income like any other distribution.
A QCD may also count toward the taxpayer's required minimum distribution for the year, benefitting the taxpayer by reducing their taxable income while they support qualifying charitable organizations of their choice. The taxpayer doesn't have to worry about meeting the standard deduction or itemizing deductions with a QCD.
Sources:
3 - https://www.fidelitycharitable.org/articles/what-the-cares-act-means-for-charitable-giving.html
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