The tax code has allowed church giving to be applied as a tax deduction for decades. However, there are steps you have to follow to get the paperwork right.
- You must use a regular, itemized deduction approach, which means a longer tax form like the IRS Form 1040 or 1040A. The fast approach with a standard deduction makes it impossible to claim a charity deduction, even to a church.
- The church that you give to has to be a recognized charitable organization under the federal tax code. These organizations are identified as 501(c)(3) entities, specifically due to the part of the tax code where their exemption is found.
- There needs to be a record or some proof of the donation provided to you by your church. That’s usually produced in the form of a canceled check copy or a receipt from the church receiving the donation. It’s important to get this document or record because it’s proof the donation occurred for the amount claimed. Without it, you could end up being audited and having taxes adjusted for denial of a non-supported donation deduction.
Not All Church Giving Is Created Deductible Equally
Donations are limited, no surprise, in the amount you can claim as an itemized deduction. For example, a donation cannot be more than half of what you earn and report as adjusted gross income (AGI). Remember, this figure is less than total earnings you have because some amount comes right off the top for dependents and other adjustments. Fortunately, if there is excess, prior year donations can be claimed on future years up to five tax returns later. It’s a bit like a deferred reduction of taxes if you keep good records.
When it comes to cash donations, records are extremely critical as there is no other way to show the donation occurred otherwise (i.e. no record of property title transfer). As noted earlier, a canceled check or receipt is the common documentation. In addition, if a donation is more than $250, written acknowledgement by the church with specific terms is also needed as an added record required by the IRS.
Some people desire to donate property to their church, which is allowable. The property has to be assessed (i.e. hire an appraiser for a report) at market value. This is the same for a car, jewelry or land, regardless. With the documentation in order then the amount can be claimed as a deduction. If there is barter, only the donation difference above the value of the barter exchange can be claimed, not the whole donation.
Mobile Church Giving Makes Taxes Easier
Making church donations with the Givelify mobile giving app makes church gifts and electronic giving an easy reality and a big boon for tax return documentation. You can get detailed records on every church donation transaction, and retrieval is a simple PDF record sent to your email account.
Then all you have to do is print out the PDF for your tax records, adding it to church acknowledgement letters if necessary. This tool makes it far easier to remember everything you’ve donated to your church, all of which count as a tax deduction. Givelify also verifies all churches are valid legal entities with the I.R.S., so you always know your donations are tax deductible.
Need Help?
Learn how to get your own annual donation report.
