Regardless of whether you're committed to tithing and give your church 10 percent of every dollar you earn on a regular basis or just make offerings whenever you can, both types of gifts can reduce your tax bill. To do so, itemize offerings and tithes on Schedule A as gifts to charity -- which covers religious organizations. Taking a charitable deduction, however, means you'll have to retain certain documents and may even require filing an additional tax form.
Itemizing as Gifts to Charity
Itemizing may not always save you more money than taking the standard deduction. The Internal Revenue Service lets you take whichever deduction is larger, so it can be beneficial to prepare Schedule A and compare the total reported on it to the standard deduction available for your filing status. If the total amount of your offerings and tithes is less than the standard deduction, and you don't have other expenses to itemize, such as mortgage interest, property taxes, job expenses or state and local income taxes, you'll usually save more in tax with the standard deduction.
Total Deduction to Report on Schedule A
Figuring out how much to deduct usually is less cumbersome when church offerings and tithes consist solely of cash donations. If you donate property, such as used furniture, you can deduct the fair market value of each item. Determining its value may require nothing more than researching the prices that retailers or thrift stores charge for comparable items in similar condition, but it can also require expert opinions and appraisals if the item is rare or unique. Using a formula or a percentage of the price you originally paid for property isn't a reliable valuation method that the IRS allows you to use.
Proof of Cash Tithes and Offerings
Although receipts and other documents that support the amount reported on Schedule A for cash tithes and offerings aren't filed with your return, the IRS does require you to have these documents in your possession. All cash donations require the retention of a bank or credit card statement, canceled check or a receipt from your church. In addition, each offering or tithe of $250 or more requires a written acknowledgement from your church. The written acknowledgement must include certain information, such as the amount donated, whether you received anything of value for making the donation and a statement that you received an intangible religious benefit for all or part of the money donated.
Proof of Property Tithes and Offerings
Tithes and offerings made with property also have record retention requirements. For all property you give to a church, you must obtain receipts that note the date of the donation, the location where it's made, the name of the church and a description of the items offered. When the total value of your property donations is $250 or more, a written acknowledgement also is needed. Filing form 8283 also may be required if your annual property tithes and offerings total $500 or more. The 8283 form will require certain details about the items given to your church, such as original costs, dates of purchase and the fair market values.
Michael Marz has worked in the financial sector since 2002, specializing in wealth and estate planning. After spending six years working for a large investment bank and an accounting firm, Marz is now self-employed as a consultant, focusing on complex estate and gift tax compliance and planning.