Non Cash Charitable Contribution significant tax deduction - IRS form 8283

[Kevin Aster Tin Obin]

Using taxcaster, it appears that donations can significantly reduce tax.  With a $10,000 donation to either cash or non cash donations, can see $2,000 refund.  Does this make sense to maximize NON CASH charity contributions and donate old vehicles, collectables, clothing, etc to get a 20% tax deduction?

Anyone share an example of how this has worked or plan to work for them?

[seattlecyclone]

Charitable contributions only give you an added tax benefit if you're itemizing your deductions. If you have a lot of state tax and a big mortgage that may be the case, but with the changes passed under the Trump years to raise the standard deduction and limit the state tax deduction to $10k there are a lot fewer folks itemizing than before.

If you do itemize, yes donations can cut your tax bill. Not sure where you're getting that 20% number from, since that doesn't match up with any of the standard tax brackets. One very common non-cash donation is appreciated stock held for more than a year: you get to deduct the full current value, and you don't have to pay capital gains tax on it.

[Kevin Aster Tin Obin]

thanks for weighing in.. 22%, not 20

agree was confused since itemized deductions are hard to take since the law clipped the state tax deduction off at 10k.. 

[catccc]

Curious to see what we return to after some of the TCJA changes expire in 2025.  At the onset of the changes, it made little difference to me, but if we were operating on inflation adjusted deductions and exemptions for 2022, my taxes would likely be lower.

That said, you can deduct the MFV of non-cash contributions.  So if you had a car you could sell for $1,000, and you donate it instead of selling it, it will save you a fraction of that $1K in taxes.  If you are in the 22% tax bracket (or 25% come 2026), you'll save $220 or $250 in taxes.  You'd be better off selling it and pocketing the $1,000.

[Catbert]

Firstly, this only makes sense to consider if you'd otherwise make charitable contributions.  I use a Donor Advised Fund to make charitable contributions.  I donate greatly appreciated stock, taking the full value as a tax deduction but not having to pay capital gains.  I bunched donations so that I'd donate to DAF enough stock to cover 3 years of what I would want to donate to charity taking the deduction in one year.  Then I'd dole it out to charities over the next 3 years.

If you have greatly appreciated stock, I suggest googling "Donor Advised Fund" to understand how they work.