Last year I contributed to the offering in church every week. I have few questions regarding this. I am not that rich, so I contribute whatever cash I have in my wallet. Can I enter this amount on my tax return? What is the minimum and maximum amount I can contribute via cash and via cheque? Are all these amounts are tax deductible? How much cash I can contribute per week?
To follow up on Todd's answer:
In 2018, it's $12,000 for single filers and married filers filing separately,
$24,000 for married filers filing jointly and
$18,000 for heads of household.
To more of your questions:
How much minimum and maximum amount I can contribute via cash and via cheque? How much cash I can contribute per week?
As much or as little as you want.
I am not that rich so
So you'll probably take the (generous IMO) standard deduction, which was created to simplify people's tax returns.
To try and answer all of your questions,
Can I enter this amount in Tax Returns?
Yes, but at the end you have to choose between the total of your itemized deductions (charitable contribution plus others such as mortgage interest and state taxes) and the standard deduction, you cannot add charitable contributions on top of the standard deduction.
How much minimum and maximum amount I can contribute via cash and via cheque? All this amounts are tax deductible? How much cash I can contribute per week?
The total of all deductions for contributions to all qualified organizations cannot exceed 60% of your income.
Any cash contribution can only be deducted if you have a receipt.
Any single contribution above $250 requires an acknowledgement from the organization which received it. There are no special requirements for contributions which are individually under $250 but more in aggregate.
Here are the rules from Publication 526 (quoting the 2017 version because the 2018 version is not yet published) that are relevant:
Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction.
You can't deduct a cash contribution, regardless of the amount, unless you keep one of the following.
A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include:
- A canceled check,
- A bank or credit union statement, or
- A credit card statement.
A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.
The payroll deduction records described next.
Contributions of $250 or More
You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records.
If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions.
Amount of contribution. In figuring whether your contribution is $250 or more, don't combine separate contributions. For example, if you gave your church $25 each week, your weekly payments don't have to be combined. Each payment is a separate contribution.
Assuming the church is a tax exempt organization, donations are deductible if you itemize your deductions. If you're not getting an annual receipt or don't have records, the deduction might be hard to justify in an audit.
The IRS publishes information on how to treat charitable contributions.
All due respect to @RonJohn, the IRS requires a receipt from a charitable organization when a single donation is more than $250. “As much as you want” fails to take this into account. I know some older people who visit their house of worship 5-7 days a week, so if one wants to push the point, can suggest that $200 * 365 = $73K. But this fails a common sense test. The IRS has certain triggers in place to review tax returns. If my donations are outside of a certain range, as a percent of income, a audit is likely to follow. If I am going to be very philanthropic, I am going to make the donations in a way that maximizes my chance of a positive audit result. This means a check or credit card, and a letter of acknowledgment back from the charity.
I am not suggesting that $100/wk cash donations never pass an audit, only that when I submit my return each year I never think “I hope I don’t get audited.” I have a folder of receipts and wouldn’t give it a second thought.
The other aspect of Ron’s answer is correct, but context is missing. One can only deduct donations if itemizing, and would only itemize if total itemized deductions exceed the standard deduction amounts he listed. To answer your comment, $300/week, $15K/yr might trigger an audit if it’s a high percentage of your income. If not, and you are randomly audited, I’d be shocked if the agent just accepted that you donate this much cash. Why take that risk?
Edit - it appears, via Ben’s answer, all donations must be documented via receipt. My smugness regarding a potential audit has been taken down a bit. Of $12K in donations, about $200 was cash. So I suppose I’d owe $44 if audited.
Most likely your church is a nonprofit organization under 501(c)(3) of the Tax Code.
If that's the case, you can try to deduct the contributions that you can prove. Unfortunately giving cash makes this a bit harder, but an auditor might shine it on if you keep contemporaneous notes, meaning you kept a log somehow of what you donated at the time you did it. He doesn't have to; the law says it must be recorded somehow; but you can always pray you don't get audited/ throw yourself at the mercy of an auditor.
Here's what I mean by "Try to deduct". Get IRS's Form 1040 Schedule A and look at the various things you can deduct on that form. It includes certain medical expenses, state income or sales taxes, real estate taxes, other taxes, interest and points on mortgages, charitable donations, disaster losses, etc. All that stuff together adds up to your itemized deductions.
Now, go back to line 8 of your new-style Form 1040 and note to the left how you get a standard deduction of $12,000 single, $24k married or $18k head of household. You can use your itemized deductions number instead, but that's only worth it if it's more.
So basically the first $12,000 of itemized deductions count for nothing :( This stinks because it used to be $6,400 (and then there was also a $4000 "exemption", that's now gone).
That means whatever "tax bracket" you are in, i.e. what your next dollar would be taxed at (say: 22%), every dollar of tax deduction saves you that same percentage on your tax.
So for instance if you're in a 22% tax bracket and you are already over your standard deduction, and you donate $1000 more, the IRS kicks you back $220.
If you don't have enough itemized deductions to overcome the $12,000 standard deduction you get anyway, then you don't get any tax savings. This really sucks for charities, because the standard deduction went up so much. Lots of people could find $6,400 of deductions, not so many can find $12,000 and so it's not worth it for them to itemize. So they get no tax benefit for donating to charity.
Oh, another limit: if you donate more than 50% of your income (1040 line 7) your deduction is capped there. Any excess can be carried forward to the next year and deducted then. You can carry forward for up to 3 years.
Edit: Now I am hearing this is a LARGE donation, not just 5 or 10 bucks. I'm also noting that you're saying you can't donate more than $250. WHOA.
I'm just shaking my head at that, because I cannot imagine a nonprofit manager who would ever allow a $10,000 donor to go without an acknowledgement letter that they would need to prove a tax deduction. You need to find a better donor.
If your goal is to stay under the $250 to prevent paperwork from being generated in order to mask your activities, then I believe your trade-off will be a difficulty in reliably deducting the donation.