Tithing is a common way for congregations to support the mission of a church or religious organization. Often, many people adhere to a personal policy of offering 1/10 of their income to their religious organization to be used for charitable purposes. In fact, the word "tithe" historically refers to the number 10 and indicated a tenth in Old English.
In modern life, tithing does not necessarily reflect any specific percentage of giving – how to calculate church tithes is a very personal decision. Tithing enables many religious organizations to promote various charitable endeavors such as assisting those in need. Do you have to tithe to the church? No, but many people do, and they can often deduct these donations from their taxes.
What Is a Charitable Donation?
How can we know whether a donation of any type is considered charitable for tax purposes? First, the organization receiving the donation must be organized around what the IRS defines as "exempt purposes" which are activities that are charitable and not motivated by profit. Qualified charitable organizations are those that are registered with the IRS as 501(c)3 organizations. Charitable organizations are formally registered as tax-exempt entities with the IRS.
Specifically, religious organizations are categorized as 501(c)3 charitable organizations by the Internal Revenue Service. You can verify an established tax-exempt charitable organization using the IRS Tax Exempt Organization Search website, however, newer organizations may not appear on the site for some time due to backlogs. It is advisable for all donors to perform due diligence before donating (especially cash) to any charity to help avoid fraud and charity scams.
Watchdog organizations such as Charity Navigator or GuideStar can help you determine the legitimacy of an organization seeking donations. If you physically attend a church, it can be much easier to ascertain the fidelity of how your donations are being handled and utilized toward charitable activities.
Read More: Types of Charity
Can You Donate to a Church?
Churches and other religious organizations are unique in being protected by the First Amendment. It is important to note that the IRS cannot consider religious activities for constitutional reasons. Therefore, the activities of a religious organization can only be considered for its charitable and non-profit activities.
The IRS automatically considers churches exempt without the need to file for 501(c)3 status. Many churches still seek formal 503(c)3 status so that congregants can easily claim tithes and other donations.
Charitable donations are broadly categorized as either cash or non-cash. Tithes are considered to be a cash donation. Giving clothing or other goods constitutes the category of non-cash donations. December 31 is the deadline for giving if you choose to claim church tithes.
For the sake of tax purposes, tithes given to a church are simply considered cash donations to a qualified charitable organization. Donations to qualified charitable organizations, such as churches, are tax-deductible on a federal tax return. Most states also offer tax benefits for charitable giving, however, it is important to check with the state tax board for specific details on how to treat donations.
Read More: How to Make Church Contribution Statements
How to Deduct Charitable Donations
You can deduct church tithes on your federal tax return as charitable donations. Normally, deductions for charitable giving require itemization on Schedule A, but the IRS has allowed deductions up to $300 (single) or $600 (married) on cash donations for non-itemizing filers for the tax year 2021. Giving beyond these limits requires the filing of Schedule A with your 1040.
Typically 20 to 60 percent of AGI for charitable gifts are deductible on your federal tax return, but up to 100 percent for itemized filers is available for qualified cash donations in 2021. Cash donations from corporations have been expanded to 25 percent of taxable income for 2021. Non-cash donated goods are deducted by fair market value and are not qualified for the expanded limits, they remain at the 20 to 60 percent limits.
Donations over $250 require written acknowledgment from the recipient organization. Donations over $500 require Form 8283 to be filed with your 1040. Donations over $5,000 require an appraisal to be obtained prior to filing.
High-value donations may also require the attachment of the appraisal to your return. For example, deductions from donations totaling over $500,000 would require the inclusion of a qualified appraisal. These guidelines apply to church tithes and any other donations to a qualified charitable organization.
It is important to keep good records for all charitable giving. If, for any reason, a taxpayer is audited, these records may be required to prove the donations and amounts were allowable deductions. The IRS requires filers to maintain records for all deducted cash donations regardless of the amount given. Effective record-keeping if you claim church tithes would include records of bank transactions or letters of acknowledgment from your church.
Hashaw Elkins is a financial services and tax professional, as well as a project management consultant. She has led projects across multiple industries and sectors, ranging from the Fortune Global 500 to international nongovernmental organizations. Hashaw holds an MBA in Real Estate and an MSci in Project Management. She is further certified in organizational change management, diversity management, and cross-cultural mediation.