Churches typically rely on donations from members in the form of offerings or tithes to pay employees and finance operations. Money you give to a religious organization as an offering is a tax-deductible charitable contribution. However, in order to take this deduction you must itemize your deductions -- and not all taxpayers benefit from itemizing.
Charitable Giving Basics
Gifts are only tax-deductible if they are made to qualifying charitable organizations. According to the Internal Revenue Service, any corporation, trust, fund, or foundation organized under federal or state laws that operates only for religious, scientific, charitable, literary or educational purposes can receive tax-deductible donations. This means that religious institutions like churches, synagogues and mosques are qualifying charitable organizations. The deduction for charitable contributions is limited to 50 percent of your adjusted gross income for the year.
When you file a tax return, you have to choose whether to use a standard deduction provided by the government or the total of your itemized deductions. Apart from charitable contributions, itemized deductions include a wide range of common expenses like property taxes, mortgage interest and certain work-related costs. The standard deduction is $5,950 for single taxpayers and $11,900 for married couples filing joint returns for the 2012 tax season. You won't benefit from your church offerings from a tax standpoint unless the total of your offerings and other itemized deductions exceeds your standard deduction.
Donations of Property
The tax deduction for charitable giving is not limited to gifts of cash. If you donate property or assets to your church, such as a used car or shares of stock, you can take an itemized deduction equal to the fair market value of the property. Fair market value is the normal market price of an asset. For example, the fair market value of a share of stock is the price of the stock at the time you made the donation.
Donations That Benefit You
If you receive something of value for making a charitable donation, you cannot deduct the full amount of the donation. Instead, you must subtract the value of the benefit you receive from the donation to calculate your deduction. For example, if you pay $100 to attend a charity dinner at your church and you receive a meal that is worth $20, you can deduct only $80 of the cost of the dinner.
- Internal Revenue Service: Topic 506 - Charitable Contributions
- Internal Revenue Service: Publication 526 - Main Content
- Internal Revenue Service: Eight Tips for Deducting Charitable Contributions
- Internal Revenue Service: Substantiating Charitable Contributions
- Internal Revenue Service: In 2012, Many Tax Benefits Increase Due to Inflation Adjustments
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.