How do tax deductions work with charitable donations?

Question

Need wallet.org says “In general, you can deduct up to 60% of your adjusted gross income via charitable donations, but you may be limited to 20%, 30% or 50% depending on the type of contribution and the organization.” but I don’t know what those words mean 😆

In: 9

Answer 1

So that’s saying that if you earned $100k, you could donate and take a tax deduction for up to $60k in donations, but certain donations would be limited to $20k-$50k in donations deducted.

The amount you deduct means you don’t pay taxes on that amount, so if you did deduct $60k of your $100k in income, you’d save about $13k in taxes, with the net effect of your bank account being about $47k lighter (60-13).

For smaller scale donations — the kinds most people make — they’d only be deductible if other deductions were enough to itemize deductions vs. taking the $12,900 standard deduction.