Question 1

What is the AGI limit for charitable deductions?

Accepted Answer

For 2024-2025, the IRS limits cash donations to qualified public charities to 60% of your Adjusted Gross Income (AGI). Long-term appreciated assets (stocks, mutual funds) can be deducted up to 30% of AGI at full fair market value. Non-cash donations to public charities are limited to 50% of AGI, while donations to private foundations have lower limits. Amounts above the limit can be carried forward for 5 years.

Question 2

How do I value non-cash donations?

Accepted Answer

For items worth less than $500, you can generally estimate their fair market value yourself. For $500-$5,000, fill out Form 8283 Section A. For donations over $5,000, you typically need a qualified appraisal. For used clothing and household items, the IRS requires they be in 'good used condition or better' unless the deduction is over $500.

Question 3

Should I donate appreciated stock instead of cash?

Accepted Answer

Yes, if you have held the stock for more than one year. Donating appreciated stock lets you deduct the full fair market value and avoid capital gains tax on the appreciation. This is one of the most tax-efficient ways to give. For example, $10,000 of stock that cost you $4,000 lets you deduct $10,000 and avoid ~$1,500 in capital gains tax.

Question 4

Which organizations qualify for a tax deduction?

Accepted Answer

Only donations to qualified 501(c)(3) public charities, religious organizations, educational institutions, hospitals, and government entities are tax-deductible. Use the IRS Tax Exempt Organization Search to verify a charity's status. Donations to individuals, political campaigns, foreign charities (with limited exceptions), and most private foundations are NOT deductible.