Are Church Donations Tax Deductible?

Are church donations tax deductible? Yes, but not by everybody. To deduct these donations you must:

• itemize your personal deductions, and
• document your donation.

Only Itemizers Can Deduct Donations

You can only deduct a donation to a church if you itemize your personal tax deductions on IRS Schedule A. This greatly limits the actual number of people who can take such deductions.

Itemized deductions are deductions taxpayers are allowed to take each year for certain personal expenses, such as mortgage interest, property taxes, state income taxes, certain medical expenses, casualty and theft losses, and charitable contributions. Individual taxpayers have the option to either itemize their deductions or take the standard deduction that is set by the IRS each year. Check the IRS website for current standard deduction amounts.

Only taxpayers whose total itemized deductions are more than the standard deduction should itemize their deductions. Taxpayers who don’t itemize get no deduction for their charitable contributions (or any other itemized deductions). Thus, from a tax standpoint, charitable contributions are useless for people who don’t itemize. Efforts to allow non-itemizers to deduct at least some of their charitable contributions have thus far failed in Congress.

Thus, while in theory all charitable contributions are deductible, as a practical matter, very few taxpayers actually deduct their contributions. This is particularly true after the passage of the Tax Cuts and Jobs Act (“TCJA”) which roughly doubled the standard deduction. Starting in 2018, it’s expected that no more than 5% of all taxpayers will itemize, down from about 30% in prior years.

This is why statements churches and other public charities often make in fundraising solicitations, such as “your contribution is tax deductible," are misleading. It would be far more truthful to say: “Your contribution may be deductible if you itemize your deductions on your tax return."

You Must Document Your Donation

In addition, you must document your donations. Without written documentation to support a donation, you can’t claim a tax deduction. There are no exceptions, even if you just put a few dollars in a collection plate each week.

What documentation you need depends on the size and nature of the donation. For donations of money under $250, all you need is documentation showing the name of the church, and date and amount of the contribution. You can use a bank statement or some other documentation from your own records that substantiates that the payment was made. If you give cash, you won't have a bank record of the donation. Thus, you'll need to obtain a written record of the donation from the church. It could be a receipt, letter, or any other document or writing as long as it has all the required information.

For all money donations above $250, you must obtain a written acknowledgement or receipt from the church. The written acknowledgement must contain:

• the church's name
• the amount of the cash contribution
• the date of the contribution, and
• a statement that no goods or services were provided by the church in return for your contribution, if that was the case.

You don't need to file this documentation with your tax return. But you must have it available if you're audited by the IRS and your deductions are questioned. Lack of proper documentation is by far the most common reason taxpayers lose valuable deductions.