The Federal Tax Credits Blog

Question: Is giving to a 501(c)3 a tax deduction or tax credit?

If you give a donation to a IRS 501(c)3, is it considered a tax deduction or a credit. If it is a deduction is there a ceiling one can give to offset their tax liability? What is the ratio? (For instance, for a $1000 donation your deduction is $250….so 25%)

Thanks…
Can someone one tell me what the reduction in tax liability would be (all things being equal and assuming all normal deductions are in place) for a business that has $1mil in AGI and donated $330k to a 501(c)3 charity.

I understand that you can give up to 50% of your AGI, but in this case my liability without the donation would be 330k, so if I donated the same amount to a charity….how much would i still owe the gov’t?

Thanks.

Answer: Deduction. You can deduct all that you donated, however it’s generally limited to 50% of your AGI for most charities. Of course these are itemized deductions so you must have enough to exceed your standard deduction to get any benefit.

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