Charitable Donation Deduction Limit

Forum|Forum|5 years ago
January 25, 2021
1 reply
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I have a "simple" scenario I would like an answer for, related to the deductability of several "flavors" of charitable donations to a "50% limit organization". Basically, I want to maximize my contribution of a significantly appreciated mutual fund, and then maximize my full itemizable charitable donation amount. EXAMPLE: With an AGI of $60,000, I believe the maximum value of the appreciated mutual fund that I can contribute and deduct is 30% of AGI or $18,000. Next, I believe I can make a further maximum donation of $12,000 of a combination of cash and household goods (Goodwill stuff, clothing, furniture, etc). Lets say roughly $7000 cash and $5000 household items. The total combined charitable donation amount not to exceed $30,000 or 50% of the AGI of $60,000. Is the above scenario correct/legit??

I do NOT wish to take into account the tax rules for 2020 related to increased limits in the CARES act, but only a "normal" tax year....

Cynthiad66

Level 14

Under the law known as the Tax Cuts and Jobs Act, P.L. 115-97, the rule that limits the charitable deduction to 50% of the donor's charitable contribution base increased to 60% for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026 (for cash contributions to public charities and private operating foundations).

For your consideration, For 2020 only, this limit has been raised to 100% under Section 2205 of the CARES Act for qualified contributions (cash donations to a public charity that is not a donor-advised fund or a supporting organization that the taxpayer elects to treat as qualified contributions).

So yes the exam you created in your question is correct, however the base increased to 60% if you would like to take advantage of the additional 10%.

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edgelser2Author

Level 3

Just want to double check your last statement about "the base increased to 60%". That may be true for cash contributions only, but I thought that since I was combining cash contributions (of well less that 60% AGI) and appreciated non-cash contributions and household goods that the limit of combined itemizable contributions would be 50% of AGI. Is that correct?