Everything You Never Knew About Tax-Deductible Donations

April is right around the corner, so it’s time for a refresher course on the thing we all love to hate: taxes. More specifically, we’re talking about tax deductions for charitable contributions or donations to organizations like STEMM. So if you’ve donated to us in the past, are currently giving, or plan to make a donation in the future, this is for you!

Here’s everything you should know about donations and your taxes.

What are tax deductions?

Write-offs, deductions, itemizing, oh my! The amount of lingo and jargon involved with taxes is enough to make you go mad (it’s no wonder tax collectors were hated in Jesus’ time).

Your feelings about taxes aside, it’s best to know what you’re getting into when tax season rolls around, especially when it comes to tax deductions.

But what is a tax deduction?

Tax deductions—also known as write-offs— lower your tax liability (what you owe the IRS). They’re all the expenses you incur over the course of a calendar year that you can subtract from your adjusted gross income (AGI), which is your taxable income after any appropriate adjustments have been made (educator expensive, income from self-employment, self-employment insurance, alimony, etc.).

You can deduct things like the mortgage interest rate you’ve paid, property taxes, medical expenses, and, of course, donations.

Every year, you have a choice to either itemize your tax deductions or take the standard deduction.

Itemize vs. standard deduction

Choosing between itemizing your deductions and taking the standard deduction is a simple math problem. Crunching the numbers can help you decided which path to take that will lower your tax liability the most.

For single and those married filing separately, the standard deduction is $12,400. The standard deduction for those married filing jointly or qualifying widow(er) is $24,800. And heads of household can claim a standard deduction of $18,650.

These numbers can change depending on your specific situation and the current federal administration at the time. Tally up all of the deductions you’ve incurred over the year 2020 and talk to your tax professional to see whether itemizing or claiming the standard deduction is best for you.

Charitable contributions as tax deductions

God calls us to give with a cheerful heart, and we are so grateful for the financial sacrifices you have selflessly made. But there are some inherent perks that come with donating like writing them off of your taxes. Here’s a closer look at what to expect this tax season.

Some new rules

2020 was a rough year, but a few good things came out of it. For example, the IRS has temporarily lifted the limit on how much you can deduct from your taxes in charitable contributions.

Typically, you can only claim around 60% of your adjusted gross income (20-30% in some cases), but with the new rules, you can now claim 100% of your AGI in charitable donations.

You can also deduct up to $300 of cash donation without having to itemize this year and next year that applies to each person if you’re married filing jointly (a total of $600).

Make sure your donations qualify

When you give to STEMM, you can rest assured that you’re giving to a qualifying organization as we are a fully registered, non-profit, religious organization. We do advise that you make sure that any other organization you give to is also completely registered and qualifies your contribution as deductible. You can learn a bit more about qualifying organizations and their specific limitations here.

Keep diligent records

Whether you’re a monthly donor or have only given once, it’s imperative that you keep track of how much you’ve donated and when. We always send a receipt when you donate, but if you need a copy of your donations to date, get in touch with our office, and we’ll send your information to you.

Volunteering expenses count

Your time is valuable, but sadly, the IRS doesn’t let you deduct the value of your time. They do, however, let you deduct any expenses related to volunteering that haven’t been reimbursed (mileage, gas, etc.). Keep all of your receipts and talk to your tax professional about your volunteering expenses when getting ready to do your taxes.

We’re told in Acts 20:35, “It is more blessed to give than to receive,” and you have shown that to be true. We want to thank you again for your generous gifts and for helping us continue our mission in Tanzania.