When you’re shopping for a charitable donation, the IRS has plenty of tools to help you decide how to use it.
The charitable deduction, for example, can help you deduct charitable contributions from your taxes.
But how to determine how much you can deduct and what tax consequences are associated with the deduction is a matter of personal taste, depending on how much time you’re willing to put into researching it and applying for the deduction.
Let’s take a closer look at how you should consider the charitable deduction.
When can you use it?
While the IRS allows you to deduct charitable donations up to $2,500 per person, your ability to use the charitable deductions depends on your circumstances.
If you have taxable income of more than $250,000 per year, you can use the deduction to donate up to an additional $2.50 per person per year to a charity.
If your taxable income is less than $200,000, you’re limited to using the charitable contribution deduction to make charitable contributions of up to one-half of the amount you contributed, up to a maximum of $5,000.
But there’s a catch: The IRS says that if you have a spouse or dependent who’s under age 18, you must file an amended return for 2017 or later.
If that’s not possible, you should file Form W-2G.
This form requires you to list any children, spouses, and dependents with you at the time you apply for the charitable donation deduction, as well as any other dependent children and spouses.
If the IRS requires you file an updated W-8 for 2017, you may need to file another W-4, or if your IRS filing status changes, you’ll have to file a new W-9.
If a charitable contribution is made to a tax-exempt organization that you belong to, you don’t have to list your spouse or dependents as beneficiaries, even if you’re filing as a dependent.
For more information, see Publication 553, IRS Publication 5, The Social Security Administration.
For 2018, you only have to report the name and Social Security number of your spouse and dependent, as long as they have not been separated for five years.
For 2019, the two-factor system has been removed.
You may be able to use a charitable gift deduction to help your spouse, but it’s more complicated.
If, for any reason, you lose the right to use your charitable deduction for 2018, the charitable gift tax credit may be available to you.
For tax year 2019, this is $5 per eligible gift.
For other years, the credit is $2 per eligible $5.
If this is the case, you have until the end of March 2019 to file your tax return for the tax year.
How much can you donate?
The maximum charitable deduction allowed to each taxpayer is $3,500.
If one person makes $100,000 and the other makes $500, the maximum charitable contribution allowed to the first person is $1,000 ($3,000 x 100).
If the first $1 million of your tax-free charitable contribution was to the second person, the $1.5 million of that contribution is taxed as income.
The maximum contribution limit for 2018 is $9,000 for singles, and $12,000 each for married couples filing jointly.
For example, if you and your spouse each made $100 million, you would have a total of $13,000 donated.
If someone else made $3 million and you made $1 billion, you’d have a combined total of at least $30,000 in charitable contributions.
For 2017, the limit on charitable contributions is $6,500, so you can donate up a total amount of up $6 million.
But if your spouse’s spouse is under age 50, you won’t be able make the charitable contributions and you’ll only be able deduct the difference.
If it’s not clear what charitable contribution limits apply, the charity may have a policy or rule that explains them.
For the 2017 tax year, the standard deduction limits apply.
But don’t take our word for it.
Here are some tips for making charitable donations.
Do you have to use charitable deductions?
If any of the following apply, you’ve got options: Your tax return isn’t filed until after your filing deadline (the date the IRS sends you the 2018 return, or the filing deadline if you file in 2019).
You have to choose the charitable tax deduction.
You don’t qualify for the standard deductions for the years you’re eligible for them.
You’re in a high-tax state (for example, California).
Your tax returns aren’t processed until the next filing deadline.
But your charitable contributions aren’t limited.
For years 2019, 2020, and 2021, you could make charitable donations of up as much as $2 million per year.
However, you still don’t count toward the standard limits on