Charitable Giving: Maximize Your Tax Deduction Impact

Charitable Deduction Basics

To deduct charitable contributions, you must itemize deductions on Schedule A. Contributions to qualified 501(c)(3) organizations are deductible. Political contributions and donations to individuals are not.

Deduction Limits

Cash donations: up to 60% of AGI

Appreciated property: up to 30% of AGI

Private foundations: up to 30% (cash) or 20% (property)

Excess carries forward for up to 5 years

Smart Giving Strategies

Donate Appreciated Assets

Instead of selling appreciated stock and donating cash, donate the stock directly. You avoid capital gains tax and deduct the full fair market value. The asset must have been held for more than one year.

Donor-Advised Funds

Contribute a large amount in one year, get the full deduction, then recommend grants over many years. Ideal for the bunching strategy.

Qualified Charitable Distributions

If you are 70.5 or older, donate up to $105,000 directly from your IRA to charity. Counts toward your RMD but is excluded from taxable income.

Bunching Donations

Make two or more years of donations in a single year to exceed the standard deduction threshold, then take the standard deduction in off years.

Documentation Requirements

Under $250: bank record or written receipt

$250-$500: written acknowledgment from the charity with statement of whether goods/services were provided

Over $500: Form 8283 required

Over $5,000 (non-cash): qualified appraisal required

Taxation.ai tracks your charitable donations and automatically calculates the optimal giving strategy for your tax situation.