According to “Giving USA,” Americans donated $427.71 billion to charity in 2018. This figure includes giving by individuals, bequests, foundations and corporations. Importantly, about two thirds of the giving “pie” is made up by individuals.
In 2018 after tax reform passed, there was a drop in the number of households that itemize their deductions on their tax returns. Charities and Non-profits were concerned that taxpayers would not be as giving if they no longer received the deduction for their charitable donations. In 2016, more than 45 million taxpayers itemized their deductions, however it is estimated that the number is far less in 2018 following tax reform.
When the tax reform was implemented and deductions simplified in 2018, many taxpayers chose to take the increased standard deduction and give up itemizing deductions such as mortgage interest and their charitable giving.
Now, it’s important to note that the limit on how much you can deduct for charity has actually increased under our present tax reform. In fact, it is still possible to get a deduction for charitable giving. If you do decide to itemize your deductions, the new law has increased the amount you can deduct to 60% of your Adjusted Gross Income (AGI) in most cases.
To get a charitable donation deduction, you must itemize on a Form 1040 and complete out a Schedule A. If you are using E-file.com we will automatically include this schedule with your itemized return.
It is important to remember, your donations must be made to what the IRS considers to be qualified organizations. The IRS has provided a search tool on the their website where you can look up the charity you’d like to support to make sure they are a tax exempt organization.
According to the IRS, “If you receive a benefit from the contribution such as merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can only deduct the amount that exceeds the fair market value of the benefit.”
Special rules also apply to donations of property or investments that have appreciated in value. To learn more about what qualifies as a charitable donation, refer to IRS tax topic 506 or you can read more on this topic in our article here: https://www.e-file.com/help/charitable-contributions.php