bell notificationshomepageloginNewPostedit profiledmBox

Hoots : U.S. income tax & charitable donations: How much is income tax reduced by donations? In the U.S., how much is income tax reduced by charitable donations? When filing, are there any special requirements to qualify for the - freshhoot.com

10% popularity   0 Reactions

U.S. income tax & charitable donations: How much is income tax reduced by donations?
In the U.S., how much is income tax reduced by charitable donations?

When filing, are there any special requirements to qualify for the deduction or credit?


Load Full (2)

Login to follow hoots

2 Comments

Sorted by latest first Latest Oldest Best

10% popularity   0 Reactions

In the US, marginal rates range from 10% to 35% depending on one's taxable income. So in theory, one saves this percent when donating to charity.
In reality, because donations are part of "itemized deductions" and there's a standard amount many do not exceed, the point is moot for those tax payers. Fairmark does an excellent job updating the marginal rate charts, as well as list the exemption amount and standard deduction for different filer status.
Note - the tax code is more complex than just the rates listed. There are phaseouts of certain benefits and phase-ins of items such as tax on one's social security benefit which can produce a phantom rate much higher than what one expects. e.g. there is a point on the tax curve where the next 00 of income is taxed at 25% but causes there to be another 0 in tax on that social security benefit, creating a 0 tax on that 00 of income. A bit tangent to the original question, but for such a tax payer, the 00 donated to charity will save her 0 in tax due.


10% popularity   0 Reactions

Charitable donations are deducted from your taxable income. The impact to the amount of tax you pay depends on your tax bracket. So if you are in a 25% tax bracket you will save $.25 per dollar that you donate to charity. There are limits to the amount of charitable donations you can claim depending on your filing status (single, married, etc.) and your taxable income.

In order to claim charitable donations you have to itemize your deductions which means that you can't use the 1040EZ form. Depending on your situation it may be better to take the standard deduction rather than itemize.

The charitable organization will issue you a receipt for donations given during the tax year and you should receive that from them by the end of January. I believe you need to have a receipt in order to legally deduct the donation from your taxes.


Back to top Use Dark theme