Charitable Contributions

Ceiling on contributions. Unless a taxpayer’s contributions are quite substantial in relation to AGI, the ceiling is not a concern.
- For the so-called 50% charitable organizations, like churches, colleges, and publicly supported charities, you can donate at least 50% of your AGI, sometimes more at the whim of congress.
- There are some 30% organizations including veterans’ organizations, fraternal societies, and non-profit cemeteries.
- 20% limit applies to contributions of capital gain property held long-term to a 30% organization.
- There is also a 30% limit on cash contributions made “for the use of” rather than “to” the organization. 20% would be the limit if this were a donation of capital gain property.
- The rules for applying the limits are made in a specific order and there are other limits sometimes in play. For additional information, consult Publication 526 Charitable Contributions
Cash Contributions.
- Regardless of the amount, a cash contribution requires a receipt or bank record. This includes donations made by check, credit card, EFT, or gift card redeemable for cash. You need an e-mail or other written receipt, a canceled check, bank copy of both sides of a canceled check, EFT receipt, monthly account statement, or credit card statement that shows the name of the organization and the date and amount of the contribution.
- If the contribution is for $250 or more, you need more. You need a written acknowledgement.
  - If the contribution is made by payroll deduction, you need a pay stub, W2, or other employer-furnished document showing the amount withheld as a donation, along with a pledge card or similar document from the charity. If the amount withheld from a single paycheck is $250 or more, the pledge card must stipulate that no goods or services were provided in return for the donation.
  - For purposes of the $250 threshold, each contribution made during the year is considered separately. So, for small donations, each under $250, no acknowledgement is needed even if they total $250 or more for the year. This is true for payroll deductions as well. Note that this does NOT pertain to non-cash deductions.
Non-Cash Deductions
- For donations of property, the amount of the deduction claimed determines the records that must be kept.
  - For a non-cash contribution of under $250, you need a dated receipt and a reasonably detailed description of the property from the organization. If obtaining a receipt is impractical, then a contemporaneous notation will satisfy the record-keeping requirement.
  - For a non-cash contribution of $250 or more, you must have the written acknowledgement from the charity as described above. The acknowledgement must indicate if you received benefits in exchange for your contribution.
  - To claim a deduction for more than $500 in total for the year, but no more than $5000, you need, in addition to the written acknowledgement, records that show when and how you obtained the property, your cost or other basis for the property, and the fair market value. You must report this information on Form 8283 Noncash Charitable Contributions. Herewith are the instructions for Form 8283.
  - For a deduction exceeding $5000 then you also need, in most cases, a written appraisal from a qualified appraiser. You do not need to attach the appraisal, but you must summarize it on Form 8283.
Nondeductible Deductions
- Donations to or on behalf of specific individuals.
- Payments to political campaigns.
- Payments to an organization that that devotes a substantial part of its activities to lobbying, trying to influence legislation, or carrying on propaganda.
- Gifts to organizations such as Fraternal groups, Professional Groups, or Social Clubs.
- Donations to civic leagues, chambers of commerce, business leagues, or labor unions.
- Contributions to a hospital or school operated for profit.
- Purchase price of church building bond.
- Donations of blood.
- Contributions to foreign organizations or governments.
For more information see Pub 526 Charitable Contributions

TXLNX 8/13/2023

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