If you donated more in cash than the IRS allows, you may have several options. Here’s what you need to know about exceeding the cash donation limit.
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This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.
What is the cash donation limit?
The cash donation limit refers to either the charitable contribution limits or special rules for proving your cash contributions.
You can donate an unlimited amount of cash. You just can’t deduct more than a certain amount. You can also lose your deduction if you don’t keep the required proof.
The first thing you need to know is the charitable donations tax deduction limit for 2022. You can deduct contributions worth up to 60% of your AGI. For example, if your AGI is $100,000, you can deduct up to $60,000 in charitable contributions.
Proving Cash Donations
You always need to keep proof of cash donations. Otherwise, people could just say they gave money to charity when they didn’t.
- For donations under $250, you can either get a receipt or keep a bank statement showing the donation.
- For donations of $250 or more, you need to get a receipt.
If you donated more than $250 and didn’t get a receipt, contact the charity to see if they have a record of your donation and can issue you a receipt. Otherwise, you may lose your tax deduction.
If you didn’t keep or lost your proof, the IRS will usually disallow your deductions. The main exception is if you can show good cause, which usually means something like a fire destroying your files.
Special Charitable Deduction Rule for 2021
There was a special rule for 2021 where people who didn’t itemize their deductions could claim a cash charitable donations. The limit was $300 for single filers and $600 for joint filers.
If you donated more than $300/$600, the IRS won’t penalize you. However, you can only claim the maximum allowed amount based on your filing status. The extra amount is just a donation with no tax deduction.
If you were married and filed separately and had one spouse donate more than $300 and the other less than $300, you might want to see if amending your tax return to file jointly will let you take advantage of the $600 combined limit. However, there are situations where you can’t amend, and since the extra deduction would likely be $30 to $100, it may not be worth it.
What can you do if you donated more than the AGI limit?
If you donated more than the current year’s AGI limit, you can carry the extra forward to a future year.
For example, in 2022, you donate $10,000 more than the limit. In 2023, you don’t make any donations. You can deduct the extra $10,000 from 2022 in 2023.
One important thing to note is that the extra amount expires after five years, and you have to count current year donations first. For example, if you had $10,000 in extra donations in 2022, you can use it in 2023, 2024, 2025, 2026, or 2027. But if you also donated up to the limit in each of those years, your $10,000 from 2022 expires and can’t be used in 2028 or beyond.
Also, you have to use any carryover amount in the next year you have space available. So if you have a carryover from 2022 and don’t make other deductions in 2023, you have to use your carryover in 2023. You can’t save it for 2024.
- No proof as required by the donation amount = IRS probably won’t count it
- Over the annual donation limits = save the extra for next year