Donation Limits When Filing Federal Taxes

by Lee Nichols ; Updated July 27, 2017

The Internal Revenue Service allows taxpayers to deduct certain contributions to religious and non-profit organizations, but limits the donations to certain amounts. Organizations for which you can deduct donations include churches, charitable institutions or medical centers and educational facilities. Donations must be for the use of the organization and if you receive any type of gift or gratuity for the donation, you must subtract the fair market value of the gift from the amount of your donation.

50 Percent Limit

Most donations fall under the 50 percent rule. The total of all of your donations to any organization of a church, educational facility, hospitals and charities that receive all of their operating funds from the public cannot be more than 50 percent of your adjusted gross income. The organization where you are making a donation will be able to tell you if your donations to them are subject to a 50 percent limit.

30 Percent Limit

Donations to other organizations fall under the 30 percent rule. You can only deduct amounts up to 30 percent of your AGI . A special requirement for donations to organizations that are typically subject to the 50 percent rule applies to donations of capital gain property. If you are donating property that will gain in value, unless you subtract the amount of the capital gain from its fair market value, you must limit the deduction to 30 percent of your AGI. For example, if you donate a piece of property that is worth 25 percent more at the time of donation than when you bought it, you can deduct any amount up to 30 percent of its value if you are claiming a deduction for its fair market value on the day of the donation. If you deduct only the amount that you paid for it when on the day of purchase, you can use the 50 percent rule.

20 Percent Limit

If you are donating capital gain property to an organization that does not fall under one of the organizations for the 50 percent rule, you can only deduct value up to 20 percent of your AGI. If the organization is not a 50 percent organization, the amount of the limit does not change no matter if you use the fair market value of the donation on the day you bought the property or the day you donated the property.

Considerations

The IRS allows taxpayers to carryover any amount that you are not able to deduct due to AGI limits for up to five years. Each year you are still subject to the limits, but can deduct up to the limit until you deduct the full amount of the donation. Keep all records regarding the donation -- including purchase documentation for donations of capital gain property -- for up to six years depending on your tax filing history.

About the Author

Specializing in business and finance, Lee Nichols began writing in 2002. Nichols holds a Bachelor of Arts in Web and Graphic Design and a Bachelor of Science in Business Administration from the University of Mississippi.