Case Study 70: Charitable Contribution Limits

Index - https://steemit.com/tax/@alhofmeister/3fyvxh-tax-blog-index

Introduction
The purpose of this posting is to further demonstrate the effect of the charitable contribution deduction. This example looks at 3 different scenarios where taxpayers with a variety of wages make charitable contributions of $5,000 to a church and $8,000 to a fraternal society. As discussed in a previous article, the contributions to the church are subject to the 50% AGI limit whereas the contributions to the fraternal society will be subject to the 30% AGI limit.

Solution

Scenario 1 does not exceed the standard deduction and as a result, the standard deduction is selected over itemizing deductions. In Scenario 2, the contributions to the fraternal society is limited by 30% of the taxpayer's AGI. In Scenario 3, the taxpayer is able to take the entire amount of their charitable contributions as itemized deductions. Note that any disallowed contributions can be carried forward 5 years.

References
https://steemit.com/tax/@alhofmeister/charitable-contributions

Disclaimer
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.