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Contributions to Compassion Unlimited are deductible to the donor. A contribution to Compassion Unlimited need not be fully a “gift” in the statutory sense of the word to be deductible to the donor. The donor’s allowable deduction will be reduced, however, by the amount of the “substantial benefit” conferred upon them as a result of their contribution. If the donor is contributing his services to a charity, he is not entitled to a deduction for those services. He is however, entitled to deduct his un reimbursed expenses that he incurred in rendering them. If the donor is contributing cash to the charity, the general rule is that there is only one limitation on the total amount that he is entitled to deduct: He may only deduct his contribution to the extent that it does not exceed 50% of his adjusted gross income. Any amount not deducted in the year he makes the contribution may be carried forward and taken the next year for up to 5 years. Ordinary assets and short-term capital gain assets (see below) are treated like cash for purposes of the 50% cap.

(For tax purposes, please touch with your financial representative)

How to Give to Charity and Pay Less in Taxes

WHAT COULD BE BETTER than having more retirement money than you need? How about being able to give it to charity tax-free?

For the lucky investor who has amassed excess funds for old age, this option became permanent under a law signed by President Barack Obama in 2015. Previously, Congress approved this strategy year by year, often leaving investors scrambling.

After turning 70.5, owners of traditional IRAs are required to take annual required minimum distributions, or RMDs. The amount is a percentage of the investor’s IRA values as of the previous Dec. 31, based on life expectancy on government tables – 4 percent for a person expected to live another 25 years, 10 percent if just 10 years, for instance. Because RMDs are taxed as income, many successful investors hate this rule. But with a qualified charitable distribution, IRA funds given to charity can satisfy this rule and escape tax that would apply if the funds were taken as a normal withdrawal. Up to $100,000 a year can be transferred directly from the IRA to a charity, all of it escaping tax.

Like most tax savings, the benefits of qualified charitable distributions are biggest for people in higher tax brackets, including those potentially subject to an additional tax on long-term capital gains.

Tax Deductions for Charitable Donations

The main effect of the new tax law on individuals and their charitable contributions is that you cannot claim the standard deduction and then itemize charitable donations.

As of 2019, the standard deduction is $24,400 for a married couple filing jointly, $12,200 for .taxpayers, and $18,350 if you qualify as head of household. The total of all your itemized deductions—including the one for charitable giving—would have to exceed these amounts before itemizing would make any financial sense. Available itemized deductions include things such as mortgage interest, state and local property taxes, and medical expenses, subject to certain limitations.

For instance, if you’re single and all your itemized deductions tally up to $10,000 for the year, you’d end up paying taxes on $2,200 more in income than you have to if claiming them rather than the standard deduction—the difference between your total itemized deduction and the $12,200 standard deduction that’s available to you.

You do have a choice as to how much you spend on qualifying itemized deductions, however, so you might get over that $12,200 threshold if you’re particularly generous with your charitable donations.

Remember that each year the standard deduction goes up to keep pace with inflation.

Whether you end up itemizing your charitable deductions or not, keep in mind that not all charitable donations qualify for a deduction. Read on for some of the limitations to watch for.

A kind gesture can heal wounds. Everyone needs a little help sometimes. Reach out and be part of something that is greater than life…something that matters…