The Internal Revenue Service encourages taxpayers to donate money and property to religious organizations by allowing for a tax deduction equal to the donation’s value. The tax deduction is governed by a set of rules that impose numerous requirements on taxpayers. Charitable donors must ensure all requirements are met to receive the full tax benefit available.
The IRS allows tax deductions for donations made to a qualified church. To qualify, the church must be organized and operated either for religious or charitable purposes. The church must also be created in or under federal or state law, the laws of a U.S. territory or the District of Columbia.
Any type of property or money donated to a church qualifies for the deduction. However, if you receive a gift or other benefit from the church in exchange for the donation, you must reduce the tax deduction by the value of the gift. For example, if a church holds a charitable fundraiser and provides you with a free ticket that ordinarily costs $100 to purchase, the deduction must be reduced by $100. The deduction is not reduced by any amount specified on the ticket as being allocated to charitable or religious work.
The tax law does not allow taxpayers to deduct the value of time spent volunteering at a church. However, costs you incur that are directly related to providing the service can be deducted. This includes the cost of traveling to and from the church and the cost to purchase and maintain a uniform required by the church when volunteering.
Value of Donation
If you donate property rather than cash, you must assess the property’s fair market value on the day of contribution to determine the correct deduction. Donated clothes and household items such as furniture and appliances must be in good used condition to take the deduction. If the amount of these items donated exceeds $500, taxpayers must obtain a written appraisal and attach it to a tax return. The IRS requires taxpayers who donate a motor vehicle to a church to use the private party sale value found in a reputable vehicle price guide. They must also file Form 8283.
The IRS limits the deductible amount to 50 percent of a taxpayer’s adjusted gross income. If in a single tax year you donate $60,000 worth of property to a church and have an adjusted gross income of $100,000, the total deduction for charitable contributions is limited to $50,000. The remaining $10,000 can be carried forward and deducted on future tax returns within five years.
To deduct the amount of contributions made to a charity, taxpayers must elect to itemize deductions. Itemized deductions are reported on the Schedule A attachment to IRS Form 1040.
Jeff Franco's professional writing career began in 2010. With expertise in federal taxation, law and accounting, he has published articles in various online publications. Franco holds a Master of Business Administration in accounting and a Master of Science in taxation from Fordham University. He also holds a Juris Doctor from Brooklyn Law School.