Excess charitable donations
Example of how excess charitable donations
can be tax deducted in carryover years of charitable
giving.
-
If in 2005, you made a charitable contribution of
school supplies held more than one year to a school
with a fair market value of $19,000. The charitable
contribution is subject to the 30% charitable
contribution limit for capital gain property.
-
You also have a $2,000 carryover from 2004 for a
cash gift to your church subject to the 50%
charitable giving limit.
-
Your 2005 adjusted gross income was $40,000.
-
Under the 30% charitable contribution limit, the
tax deduction due to charitable giving of school
supplies is limited to $12,000 (30% of 40,000
adjusted gross income).
-
Since the overall tax deduction limit for
charitable contributions is $20,000 (50% of $40,000
adjusted gross income), the $2,000 carryover from
2004 is fully tax deductible.
-
The total tax deduction for your 2005 tax return
due to charitable giving is $14,000 ($12,000 +
$2,000). Your carryover of charitable
contributions to 2006 is $7,000 balance from
the gift of school supplies that was subject to the
30% charitable contribution limit.
|
2005 adjusted
gross income
|
$40,000 |
| 2005 charitable
contributions |
$19,000 |
| Charitable contribution limit
for porperty |
30% of AGI |
| Amount of charitable giving able
to deduct (30% x $40,000) |
$12,000 |
|
Total
charitable contribution limit for 2005 (%
of AGI)
|
50% of AGI
|
| Total amount of charitable
giving able to deduct in 2005 (50% x
$40,000) |
$20,000 |
|
Amount available for
charitable contribution deduction not taken by
2005 charitable contributions ($20,000 -
$12,000)
|
$8,000 |
|
2004 carryover charitable
contributions (since the carryover amount is
less than amount available for deduction, the
full carryover of 2004 charitable giving can be
deducted)
|
$2,000
|
|
Amount of 2005 charitable
giving to be carried over to 2006 ($19,000 -
$12,000)
|
$7,000
|
|
