Giving money to a good cause can lift our spirits, but can it also lift our tax burden? What about if we’re not donating to a charity, but to a church? Church, synagogue and mosque donations are tax-deductible, as long as your church meets the 501(c)(3) regulations set by the Internal Revenue Service. Whether or not you actually benefit from a deduction depends on your record keeping and if you itemize your deductions.
If you intend to make a charitable donation, a financial advisor can help you figure out whether it is tax-deductible and how it impacts your taxes.
Which Donations Are Tax-Deductible
Monetary donations and donations with a cash equivalent to a house of worship are deductible as long as you can prove them and the religious organization meets reporting requirements. Donations of time — like volunteering at a food drive or organizing the church choir — are not tax-deductible.
If you donate something like a piano, you can request a receipt for the donation for the value of the piano. This receipt allows you to claim a tax deduction for the value of goods donated, not just the cash amount you contributed. This is referred to as a donation in-kind, and the Internal Revenue Service has specific rules on calculating the value of the property you donated. You can review these rules in IRS Publication 561.
Larger-value non-cash donations like land or property can be donated and deducted, but have limitations on how much you can claim as a deduction. The limits are based on the type of property being donated, the organization you’re donating it to and your adjusted gross income.
If you’re in a position to donate property to your religious organization, consult with an accountant to plan the best way to do so.
How to Claim Church Donations
Cash donations are only deductible if you keep track of them. Occasionally throwing $20 in the offering plate won’t help when it comes time to file your taxes. You’ll need to obtain a written receipt or statement from the church you’ve donated to for cash donations. It must include the church’s name, the amount, the date, and a statement that you didn’t receive anything in return for your donation.
Monetary donations like those made through checks, credit cards, or ACH payments from your bank are much easier to track and claim. But if you claim over $250 in donations, you’ll still need to get the receipt or statement showing where you donated, the date(s) of your donation, and the amount of your donation(s), with a statement that you didn’t receive goods or services for your donation.
Standard vs. Itemized Deductions
Even though you can claim donations to a church, synagogue, mosque, or other religious organization, you may not find it worth doing so. You’ll have the benefit of knowing you supported your favorite religious organization, but you may not have the benefit of a reduced tax burden.
With the passing of the Tax Cuts and Jobs Act of 2017, the standard deduction was increased significantly. For tax years 2022 and 2023, the standard and itemized deductions are as follows:
|Filing status||Tax year 2022||Tax year 2023|
|Married, filing jointly and qualified widow(er)||$25,900||$27,700|
|Married, filing separately||$12,950||$13,850|
|Head of household||$19,400||$20,800|
This substantial increase means that fewer households see a benefit to itemizing their deductions. The Urban-Brookings Tax Policy Center estimates that about 90 percent of American households take the standard deduction instead of itemizing.
Under current law and policy, the only way to get a tax deduction for a charitable donation is by itemizing your tax return. But itemizing your tax return only makes sense if doing so allows you to claim more than the standard deduction. For the average married household that files jointly, finding $25,900 or more in items to deduct can be difficult.
In addition to church donations, these are some other common deductions you may be able to claim if you itemize:
- Out of pocket medical or dental expenses not covered by insurance that exceed 7.5% of your Adjusted Gross Income (AGI)
- Long-term care insurance premiums that exceed 10% of your AGI
- Mortgage interest and some home equity loan and Home Equity Line of Credit (HELOC) interest
- Property taxes, state taxes, and local taxes up to 10%
- Casualty and theft related to a federally declared natural disaster, up to 10% of AGI
- Unreimbursed job losses, with limitations outlined in IRS publication 2106
Tax Planning Strategies
One strategy to be able to claim church donations is to make lump-sum donations. If you have years where you’ll be able to itemize because of other large expenses, you can make larger donations in those years.
Even if you don’t have additional costs that justify itemizing, you can still plan your donations so you can benefit from a deduction. For example, you could make a larger donation in every odd-numbered year instead of a moderate donation every year. This could allow you to itemize your donations while still meeting your donation goals or obligations.
If your faith requires that you tithe a certain percentage of your income, you may be able to work with your church leaders to make lump sum contributions for tax purposes while still remaining in compliance with doctrine.
Most donations to a house of worship are tax-deductible, but you may not benefit from that tax deduction. If you’d like to get a tax break for your donations, you need to keep track of them and make them in a year you’ll itemize your deduction. Working with a CPA and CFP can help you strategize how to best donate funds for maximum utility to you and the organization of your choice.
Tax Planning Tips
- A financial advisor can help optimize your financial plan to lower your taxes. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- SmartAsset’s free federal income tax calculator can help you get an estimate of your income taxes.
Photo credit: ©iStock/donald_gruener, ©iStock/Hailshadow, ©iStock/BlackSalmon