Reduce Your Tax Liability with Charitable Deductions
As we approach the end of the year, one important tax minimization strategy is through charitable donations. In 2021, special rules allowed taxpayers to deduct up to $300 for single filers and $600 for joint filers without having to go through the trouble of itemizing deductions. Congress allowed that rule to expire and the rules have returned to normal, itemization on Schedule A.
For 2022, you are allowed to contribute cash donations up to 60% of your Adjusted Gross Income (AGI). This is also a change from 2021, where taxpayers were allowed to deduct up to 100% of their AGI. To qualify as a charitable contribution, the deduction must be to a qualified charitable organization under federal law, otherwise known as a 501(c)(3) charitable organization. If you are unsure if the organization you are wanting to donate to qualifies, you can click Here.
Donating goods, such as clothes, has different rules. The deduction is based on the item's fair market value at the donation time. If you donated over $500 in non-cash donations, taxpayers must file Form 8283.
There are many different rules and types of charitable donations. For assistance or questions about charitable donations, please reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc., at (618) 997-3436.
*** The information provided above is for general informational purposes only. It is not to be considered financial, legal, or tax planning advice. ***