Charitable Tax Deduction: How Giving Can Save You Money During The Holidays
Thanksgiving is coming up fast, and you know what this means, right? That’s right — it’s time to give and claim your charitable tax deduction!
In this article, we’ll cover:
- What are charitable donations
- Charitable tax deduction definition
- How charitable donations can reduce tax liability
- What counts as a charitable donation
Though it’s important to note that you can give as much of your money to anyone you want, there are tax perks to giving to specific organizations. Let’s dive in!
What Is A Charitable Donation? What’s A Charitable Tax Deduction?
What Is The Charitable Donation Limit For 2022?
For 2022, the charitable donation limit is generally 60% of AGI (adjusted gross income) for cash and 30% AGI for non-cash assets (must have been held for at least a year).
For example, let’s say you make $50,000 a year before taxes. This is otherwise known as your gross income. If you want to donate money to a qualified charity, the maximum amount you can donate is $30,000. To donate a non-cash asset, such as a building, the maximum value you can donate is $15,000. (You must have held this asset for at least a year.)
You can also donate over this amount and carry the surplus over for up to 5 continuous years.
Please note that there can be additional limitations for each charity. For instance, private charities limit deductions of 30% AGI.