Charitable Contribution Rules for 2022: Back to Normal

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The rules for charitable donations were expanded in 2021 as part of COVID-19 recovery. In 2022, the rules will be back to normal. Here’s what to expect.

What were the special charitable contribution rules for 2021?

The main change for 2021 was allowing all taxpayers to deduct up to $300 in charitable contributions ($600 for joint filers) without itemizing their deductions. Normally, people who use the standard deduction can’t take any charitable contribution deductions.

At present, there will not be a $300 charitable deduction in 2022.

What are the charitable contribution limits for 2022?

The charitable contribution limits depend on what kind of contribution you’re making. The limit is a percentage of your Adjusted Gross Income.

  • Cash contributions to a public charity in 2022, 2023, 2024, and 2025: 60% of your Adjusted Gross Income each year
  • Cash contributions to a public charity after 2025: 50% of your AGI
  • Contributions of short-term capital gain property to a public charity: Same as above
  • Cash and short-term gain contributions to a private foundation: 30% of your AGI
  • Contributions of long-term capital gain property to a public charity: 30% of your AGI
  • Contributions of long-term capital gain property to a private foundation: 20% of your AGI

Charitable donation deductions are an itemized deduction. If you don’t itemize, you can’t claim a deduction.

What donations qualify for the charitable contribution deduction?

Tax law requires that deductions be allowed only for contributions that benefit a charitable purpose. For example, you can’t deduct buying a Rolex even though Rolex is owned by a non-profit.

An organization must qualify for tax-exempt status before being granted tax benefits. The list of eligible entities includes organizations operated exclusively for religious purposes, charities, scientific, literary, and educational purposes, and the prevention of cruelty to children.

Nonprofit veterans’ groups, fraternal lodges, cemetery and burial companies, and certain legal corporations may qualify for tax exemptions, but only if donations go towards eligible purposes. An example of this category is the Knights of Columbus.

The IRS Tax Exempt Organization Search Tool can help verify an organization’s tax-exempt status and determines its eligibility for deductible contributions. Donations to a federal, state, or local government may be considered deductible charitable contributions if the gift is earmarked for public purposes such as maintaining a public park. However, gifts to benefit a particular individual, for-profit business, or private interests do not qualify as deductible contributions.

Quid Pro Quo Contributions

Quid pro quos are donations that involve an exchange of something for money. This means that you get something back for your donation.

You can only deduct the amount over the fair market value of what you received. For example, if you paid $100 for a round of golf that normally costs $50, you can deduct $50.

Donated Items

If you donate items to a charity, you can generally deduct the fair market value of what you donated. In most cases, you can use pricing guides for your items if guides are available for that item. In some cases, you may need to use what the charity sold your item for.

Stock Donations

It’s a common tax planning move to donate stock or other appreciated securities.

When you donate stock you generally :

  • Get a charitable deduction for the fair market value of your shares at the time of your donation
  • Avoid having to pay the capital gains taxes you would have paid if you sold the stock

Can you deduct money you donated to people affected by the war in Ukraine?

The usual charitable deduction rules apply to any money you donate to Ukraine. Congress hasn’t passed any special tax laws for donations to the Ukraine.

If you donate to a qualifying non-profit organization, you can take a deduction under the usual rules. If you provide direct assistance to an individual or family, you generally can’t take a charitable contribution deduction.

What records should you keep to substantiate your deductions?

You should request a receipt whenever you make any type of charitable contribution. If the IRS audits your contributions, it will usually want to see your receipts. If you can’t provide proof of your contributions, the IRS may disallow your deductions. That could result in you owing more taxes plus interest and penalties.

What is the charity tax form?

The IRS charity tax form for non-cash contributions is Form 8283.

There is no special charity tax form for cash contributions. Cash contributions go directly on your Schedule A (itemized deductions).

If you don’t itemize deductions, you usually don’t get a charitable giving deductions because it’s one of the things your standard deduction covers.

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