End Of The Year Tax Series - Part 2: Charitable Giving and Deductions

Updated: Dec 11, 2018

'Tis the season...to give. Nothing quite feels as good as helping those in need, particularly during the holiday season. This is a time to feel grateful for so much and show true kindness by giving back. When it comes to taxes, and charitable donations, giving still can truly help you come tax season as well, you just need to know the rules.

Charitable Deduction:

One may want to contribute regardless but might as well get a tax deduction if possible

2018 Standard deductions are: $12,000 single and $24,000 Married Filing Jointly.

If all deductions by the taxpayer are above that threshold then each dollar contributed after the threshold is worth a deduction at the taxpayer’s rate.

For example, a taxpayer in the 22% bracket who already cleared the standard deduction with other itemized deductions will save $22 on a $100 contribution.

For many U.S. taxpayers though, this increase in the standard deduction means that it will become more financially beneficial to simply take the standard deduction than to itemize deductions on their federal income taxes. Donations to charity are among the deductions that taxpayers can itemize.

A way to still benefit from itemizing deductions:

Bunching or bundling itemized deductions

Donors having the flexibility to time the payment of qualifying deductible expenses may want to consider bunching or bundling these expenses, including charitable gifts, into alternate years. This may increase the likelihood of being able to itemize deductions in alternate years. If you make charitable gifts this way, you could notify the charity that your larger gift is for a two-year period.


Claiming a charitable deduction is simple when you write a check to a charity or make an online donation with your credit card.

For a cash gift of any amount, you need a receipt (showing the date and amount of your donation) or a bank or credit card statement, payroll deduction record, cancelled check, or other bank record showing the transaction. Email communications are generally acceptable. If you donate through a text message, the IRS will accept the phone bill as verification if it shows the recipient organization, the amount, and the date given. So, make sure you keep records and receipts for your charitable donations.

If you want to claim a deduction for a cash gift of $250 or more, you must have a written receipt, describing the gift, from the charity. To determine whether or not this requirement applies to you, you do not have to add up all your donations to a particular charity. For example, if you give the local food bank $50 every month, each contribution is separate, and the receipt rule does not apply.

The receipt should also state whether or not the charity gave you any goods or services in exchange for your gift; if so, the receipt must describe them and give an estimate of their value. The charity doesn’t have to report a low-cost item it gives to you as a token of thanks—for example, a plastic water bottle or coffee mug with the charity’s name on it.

You must get the receipt by the time you file your tax return.

Non-cash contributions have a special set of detailed rules – this will be discussed in an article later on.

Bottom line: Giving charity is great even better is when you get to deduct the contribution.