Many churchgoers believe in tithing, which is usually the practice of giving a tenth of one's income to the church, though some people and religious groups may define tithe on their own terms. 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.
You can generally deduct up to 60 percent of your adjusted gross income for your total charitable donations, including tithes, though lower limits apply for certain donations.
Deducting Tithes and Offering Donations
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. Church tithes, a church offering given on Sunday morning or another donation to a religious group are all the same to the government. According to IRS Publication 526, you cannot claim more than 60 percent of your adjusted gross income as charitable deductions.
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 for a particular year.
Considerations and Exceptions
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.
Depending on the type of donation made, lower limits of 20 percent or 30 percent may apply rather than the usual limit of 60 percent of charitable donations. This generally applies to property you would sell for a capital gain, such as real estate or other investment property.
2018 Tax Law Changes
Charitable donations aren't one of the deductions being directly affected by tax law changes in 2018, but the standard deduction is rising to $12,000 for individuals, $24,000 for married couples filing jointly and $18,000 for heads of household. That means some people may not find it worth documenting and itemizing their deductions, including church tithes and other charitable donations.
Itemizing and Deducting in 2017
As of tax year 2017, the standard deduction is $6,350 for single people, $12,700 for married couples filing jointly and $9,350 for people filing as head of household. That may affect people's decisions to itemize, including itemizing tithes and offering donations.
- IRS: Publication 526
- IRS: Topic 506 -- Charitable Contributions
- IRS: Publication 501 (2018), Dependents, Standard Deduction, and Filing Information
- IRS: Substantiating Charitable Contributions
- Forbes: New: IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More
- Forbes: IRS Announces 2017 Tax Rates, Standard Deductions, Exemption Amounts And More
- AG Financial Solutions: Charitable Donations: Maximizing Your Donations
- church image by pearlguy from Fotolia.com