In addition to helping the causes that matter to you, charitable contributions are a savvy way to save money on your taxes.
Keeping track of what you contribute can earn you a tax deduction on your annual return, depending on how much you donate and which organizations you can include. But there are limits on how much money you can go towards a deduction, and not all charities qualify as tax-deductible.
The rules also differ for individuals and businesses, and they vary by country—this article focuses on charitable donations in regards to U.S. tax codes. The rules also change frequently, so be sure to check IRS.gov for the most up-to-date information.
How much can I donate to a charity in 2022?
When it comes to charitable contributions, of course you can choose to donate as much money as you like—but there’s a limit to what you can claim on your taxes.
Before 2020, individuals could generally deduct up to 60 percent of their adjusted gross income (AGI) when filing their tax returns. In 2021, the U.S. Congress voted to temporarily raise the ceiling to 100 percent as part of the Coronavirus Aid, Relief & Economic Security (CARES) Act, allowing some taxpayers to totally eliminate their tax liability through charitable giving. The limit returned to pre-pandemic levels in 2022, and there are no indications of any more changes at this time.
The ceiling on donations may also be limited to 50 percent or as low as 20 percent due to specific restrictions on certain organizations, including:
- Veterans organizations based in the U.S.
- Fraternal societies if the money is used exclusively for charitable purposes
- Private foundations that do not quality as public charities
- Cemetery organizations dedicated to the care of the property as a whole (not just a particular plot or crypt)
These rules apply to cash contributions, and there are further regulations governing the transfer of property and vehicles, as well as in-kind donations and assets with long-term capital gains. To dial in on the specific details of how to calculate what donations you can deduct from your taxes, refer to IRS Publication 526.
Should I itemize my charitable donations?
Well, it depends. It used to be that if you wanted to receive the most possible savings on your tax return, you needed to itemize your charitable contributions with your other deductions.
However, recent increases in standard deductions set by the IRS mean that it may be more likely that they exceed lists of itemized deductions, benefitting taxpayers who don’t itemize. A new deduction for 2021 gives single taxpayers an extra $300 to claim with their standard deduction; married couples receive $600.
The most up-to-date standard deductions—which will apply for the 2022 tax year—are as follows:
- Single: $12,950
- Married, filing jointly: $25,900
- Head of Household: $19,400
If the total itemized deductions—including charitable donations—add up to less than the IRS standard deduction for that year, taxpayers might consider grouping contributions together into a single tax year to put the amount over the standard deduction. Giving two years’ worth of donations one year and skipping the next may be the optimum choice.
In either case, make sure you keep your receipts as you donate throughout the year so you can make an informed decision when it’s time to calculate your taxes.
Which charitable donations qualify for a tax deduction?
There are plenty of worthy causes out there that deserve support. However, in order for a donation to count towards a tax deduction, it has to be a non-profit organization approved by the IRS.
To qualify for tax-exempt status, an organization must apply for and receive confirmation under section 501(c)(3) of the Internal Revenue Code. The IRS refers to these as “charitable organizations,” and Code section 170 makes them eligible to receive tax-deductible donations.
Any organization can be considered non-profit if it has a purpose other than making money; however, only those organizations with 501(c)(3) status recognized by the IRS are eligible for tax exemption because of their charitable programming.
Examples of qualified non-profit organizations with 501(c)(3)status include:
- Churches, synagogues, or other religious institutions
- Emergency relief funds
- Educational facilities, including public universities
- Museums and other cultural institutions
- Volunteer fire companies
- Groups that maintain parks, nature preserves, and other public spaces
- Organizations that raise funds to help people in need, prevent cruelty to animals, and protect the environment
Before you make a donation, you can check the tax status of your charity of choice. To see if a particular charity qualifies as a 501(c)(3), check the IRS Tax-Exempt Organization Search Tool.
Does a donation to Kiva qualify for a tax deduction?
It sure does. Kiva is a 501(c)(3) nonprofit organization registered in the state of California, and all donations towards it are considered tax-deductible contributions in the United States.
A donation to Kiva is different from the loans made on Kiva.org, of which 100 percent go to their borrowers. Kiva does not charge a fee for connecting lenders and borrowers.
Instead, we rely on optional donations by our lenders to support our operations around the world, supplemented by some grants, earned interest, and corporate sponsors.
Why donate to Kiva?
We’re known for using charitable contributions efficiently and transparently, with the highest possible rating on Charity Navigator.
These are some of the ways that we use your donations:
- We send expert staff to over 80 countries to perform due diligence, cultivate new partnerships, and expand Kiva’s reach
- We train hundreds of volunteers who translate and edit every loan posted on the Kiva website
- We’ve built and must maintain a complex technical infrastructure that facilitates over $1 million in loans each week
- We develop engagement programs and provide customer service to our valued lenders around the world
- We develop innovative new products designed to scale our impact on financial inclusion.
Your charitable contribution is essential in helping us promote financial inclusion and bring economic agency to those who need it most. Please join us as we work to transform the global financial system so that every person has access to the capital and resources they need to thrive.