You’ve made a charitable donation to a qualified organization and they gave you a receipt for your donation. Great job, you deserve to feel good about your action! Now, do you get a tax deduction for your good deed?
In most cases the answer is “NO”. Here is why:
1. IRS says that only about one in three tax filers itemize deductions. Two out of three tax filers take a standard deduction, That means that most people do not get to list specific charitable donations as deductible expenses. In other words, for most people, your taxes are the same with or without you charitable donation.
2. Higher income tax filers are affected by a phase out of itemized deductions and may not benefit from charitable contributions.
3. There are limits to the overall amount that a tax filer can deduct as a charitable contribution. People with low taxable income who have other not-taxed support (like students, newly self-employed people or elderly tax filers, for example) can be affected more often that we might guess.
I recognize that is a widely misunderstood tax issue, that’s why I wrote the blog post. The IRS discusses this topic in Publication 526 titled “Charitable Contributions”.