Charitable Giving and Tax Returns: A Simple Guide for Supporters of Social Causes
Updated: Jul 21
When it comes to supporting a cause that's close to your heart, the emotional reward is often the primary motivator. But did you know that your charitable contributions can also help reduce your tax liability? Here's a simple guide to understanding how your support for social causes can impact your U.S. tax return.
1. Itemized Deductions:
To benefit from a tax deduction, you need to file an itemized deduction rather than a standard deduction on your tax return. This involves listing out your deductible expenses on Schedule A of Form 1040. Remember, only taxpayers who itemize their deductions can deduct charitable contributions.
2. Qualified Charitable Organization:
In order to claim a tax deduction, the donation must be made to a "qualified charitable organization." These are usually nonprofits that have been granted tax-exempt status by the Internal Revenue Service (IRS).
3. Keep Records:
Always keep a record of any donation you make. For cash donations, this can be a bank record or a written acknowledgement from the organization. For donations of $250 or more, you'll need a written acknowledgment from the charity.
4. Deduction Limit:
Generally, you can deduct contributions up to 60% of your adjusted gross income (AGI), but there are instances where the limits may be 20%, 30%, or 50%. It's essential to understand these limits to accurately calculate your potential deductions.
5. Special Tax Deductions for Non-Itemizers in 2021 and 2022:
Due to the CARES Act, individuals who take the standard deduction can claim a special deduction of up to $300 for charitable contributions made in cash during 2021. For 2022, the amount increases to $600 for those filing jointly.
Remember, giving to a social cause isn't just about the potential tax benefits; it's about making a difference in the lives of others and creating a positive impact in the world. So, the next time you want to support a worthy cause, consider Champions Factory, a global nonprofit that empowers individuals and communities to unlock their full potential.
You can support our work via GlobalGiving at https://www.globalgiving.org/projects/empowerorphans/.
Your donation not only makes a real difference to the individuals we serve but could also provide you with tax benefits.