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Many churchgoers believe in tithing, which is the practice of giving a tenth of one's income to the church. As long as the church is recognized by the Internal Revenue Service, those donations can be claimed as deductions on the giver's income taxes. Whether it is advantageous to do so depends on the amount of your itemized deductions compared with the standard IRS deduction.
Amount of Deduction
Any amount given to your church constitutes a charitable donation in the eyes of the IRS, whether or not it is exactly 10 percent of your income. According to IRS Publication 526, you cannot claim more than 50 percent of your adjusted gross income as charitable deductions. Depending on the type of donation made, such as real estate, lower limits of 20 percent or 30 percent may apply.
How Deductions Work
Tax deductions help reduce your taxes by reducing your taxable income. They are not deducted from the amount of income tax you owe. For example, if you had to pay a 10 percent income tax on a gross income of $50,000, your income tax would be $5,000. If you tithed $5,000, that would reduce your taxable income to $45,000, making your 10 percent income tax payment $4,500. It would not reduce your income tax from $5,000 to zero. An item that directly reduces your taxes owed is called a tax credit.
For tithes or other charitable donations to lower your tax bill, you must claim them as itemized deductions. Taxpayers can claim itemized deductions or the standard IRS deduction but not both. The only way for itemized deductions to reduce the amount of tax you owe is if the sum of all your itemized deductions is more than the standard deduction found in Table 6 of IRS Publication 501.
While most churches qualify as nonprofit, charitable organizations, check to make sure your church is before claiming donations as deductions. You can verify this by calling the IRS or visiting the agency's website. Additionally, make sure you have appropriate documentation to prove you paid the tithe you are claiming as a charitable contribution. In many cases, a statement from the church indicating the amount given and stating you have received nothing in return for the donation will be acceptable.
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