Tax Newsletter

• Effect of Marital Status on Federal Tax Filing Status
  For federal income tax purposes, there are five tax “statuses:” single; head of household; married filing jointly; married filing separately; and qualifying widow(er) with dependent child. Status affects tax credits and... Read more.
• Tax Issues Associated with Division of Pension Benefits in a Divorce
  An increasingly large portion of the assets of married couples consist of rights to payments and stock from pension plans. In many states such assets are subject to division during a divorce. Divorce and division of property are... Read more.
• Reducing Tax Liability Through Flexible Spending Accounts
  To provide some relief from rising health care and dependent care costs, federal tax laws authorize the establishment of “flexible spending accounts” (FSAs), sometimes known as “flexible reimbursement accounts.”... Read more.
• Tax Deductions for Donations of Property to Charities
  The U.S. government has long encouraged citizens to contribute to charity. One method of encouraging philanthropic giving is the allowance of deductions from income for federal tax purposes for donations to “qualified”... Read more.

• Changes in tax law you should know about this year
• Facebook and IRS ready for $9 billion tax court fight
• Trump administration rejects California’s healthcare tax
• 4 Red Flags to Look Out for When Hiring a Tax Preparer
• Most Americans Want the Rich to Pay Higher Taxes, According to Every Poll Everywhere

Limits on Tax Deductibility for Charitable Contributions

If you made a tax-deductible contribution to a qualified charitable organization, the actual amount you can deduct may be limited to a percentage of your adjusted gross income. The amount that you are entitled to deduct depends on several factors:

• Who you made a contribution to
• What you contributed
• Your income

The 50% Limit

In general, your charitable deduction cannot be more than half of your adjusted gross income. Contributions made to qualified organizations are subject to the 50% limit. These types of organizations include:

• Indian tribal governments
• The United States, District of Columbia, or any state or political subdivision of the U.S.
• Churches
• Educational organizations with a full student body and faculty on site
• Hospitals and research centers

Different rules may apply to contributions of capital gains property (property that would bring long-term income).

The 30% Limit

Your charitable deduction cannot be more than 30% of your adjusted gross income. Contributions subject to the 30% limit include:

• Contributions of capital gains property to any 50% limit organizations (generally)
• Money spent on behalf of a student living with you who was selected by a qualified organization
• Gifts to other qualified organizations besides those subject to the 50% limit
• Gifts other than those that are capital gain property for the use of any organization

The 20% Limit

For some contributions, your deductions cannot be more than 20% of your adjusted gross income. Contributions subject to the 20% limit are all those that are capital gains property gifts to or for the use of a charitable organization, aside from those that fall under the 50% limit.

Note: If you contribute 20% or less of your adjusted gross income, there are no limits to the deduction for your total contributions.

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