What Percent of Church Giving Can Be Taken Off Federal Taxes?
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. In most years, as long as you itemize your deductions, you can generally claim 100 percent of your church donations as a deduction.
Key Takeaways
- To deduct donations you make to your church, you must itemize your expenses on Schedule A when you file your personal tax return. You will only benefit from itemization when your deductions exceed the Standard Deduction for your filing status.
- The total of your church cash donations plus all other charitable contributions you make during the year typically can't exceed 60% of your adjusted gross income (AGI). However, the amounts you can't deduct this year can be deducted on one of your next five tax returns.
- Whenever you make a cash donation to your church, you must retain either a receipt, canceled check, or a bank or credit card statement.
- If you make a single cash donation that’s greater than $250, you must also obtain a written acknowledgment of the donation from the church.
Itemized deduction requirement
In most years, 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. Most taxpayers use Schedule A, when their total itemized deductions exceed the Standard Deduction for their filing status. If you use the Standard Deduction, your church donations typically won't offer any additional tax savings.
For 2020 and 2021 only
The Consolidated Appropriations Act (CAA) was signed into law on December 27, 2020, as a stimulus measure to provide relief to those affected by the pandemic. For tax year 2020 taxpayers that take the Standard Deduction can deduct up to $300 of qualified cash contributions without itemizing their deductions. This amount is doubled in 2021 to $600 for taxpayers filing married filing jointly.
Limitations on annual church donations
The total of your church cash donations plus all other charitable contributions you make during the year typically cannot exceed 60 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.
For tax years 2020 and 2021 only, the contribution limit is 100% of your adjusted gross income (AGI) of qualified cash donations to charities.
TurboTax Tip:
You can deduct the fair market value of property you donate to a church. If your donation exceeds $5,000, you'll need a written appraisal as documentation of its value.
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.
Additionally, if any single donation that you make 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. Different appraisal requirements need to be met when the value of you donation exceeds $5,000.
TurboTax has a tool called ItsDeductible that can help you determine the IRS-approved value of your charitable donations.
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