When you prepare your federal tax return, the IRS allows you to deduct the donations you make to churches. If your church operates solely for religious and educational purposes, your donation will qualify for the tax deduction. As long as you itemize your deductions, you can generally claim 100 percent of your church donations as a deduction.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Itemized deduction requirement
The donations you make to your church throughout the year can be deducted from your taxes only if you itemize your expenses on Schedule A when you file your personal tax return. To use Schedule A, your total itemized deductions must exceed the standard deduction for your filing status. If the standard deduction provides a greater tax benefit, your church donations won't offer any additional tax savings. However, you can deduct those donations in any of the next five tax years that you choose to itemize deductions.
Limitations on annual church donations
The total of your church donations plus all other charitable contributions you make during the year cannot exceed 50 percent of your adjusted gross income (AGI). If it does, then you cannot deduct 100 percent of your donations in the current tax year. However, the amounts you can't deduct this year can be used as a deduction on one of your next five tax returns.
Donating cash to a church
The IRS has various record-keeping and documentation requirements, depending on the amount of cash you donate to a church. Whenever you make a cash donation to your church, you must retain either a receipt, canceled check or a bank or credit card statement. It's not necessary for you to send these to the IRS, but if the agency ever contacts you for proof of your donations, you are required to have the documentation.
However, if any single donation is greater than $250, you must also obtain a written acknowledgment from the church. This acknowledgment should include the donation amount, a description of any goods or services provided to you in exchange for your donation and a statement that the remaining benefit you receive is an intangible religious one. If you do receive goods or services in the exchange, you must reduce your deduction by their value.
Donating property to a church
When you donate property to a church, the tax laws require you to assess the fair market value of each item. You may choose any valuation method, as long as it gives a reasonable estimate of the price a buyer would pay for similar property on the open market. For example, it is reasonable to obtain an independent appraisal on a precious stone you donate to the church; providing your own estimate without having any knowledge of gems is not an acceptable valuation method. As long as your estimate is reasonable, you can still claim a deduction for 100 percent of the value.
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