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How do charitable write offs work?
I always thought that what you gave to charity was treated as non-income, in other words if you donate 100,000 that is simply deducted from your income and you paid taxes on the balance. With Obama's wanting to change it I suspect I was wrong in the first place, so, is it like if you give enough it has a larger effect on your taxes than the amount given?
2 Answers
- rtfmLv 710 years agoFavorite Answer
You're oversimplifying it, but yes, you're correct. If you itemize deductions, then you get to subtract the total of your deductions from your income before you calculate the amount of taxes due.
It never has a "larger effect" on your taxes than the amount you give. The only difference it makes in your taxes is that you save a percent of your donation. The percent would be whatever tax bracket you're in. For example, if you are in the 15 percent tax bracket and you itemize deductions and you make a charitable contribution of $1000, you'd save $150 off your total tax bill.
- Wayne ZLv 710 years ago
It has never been a "larger effect" than the amount given.
Take the amount give and multiple by your tax bracket. That is the amount of federal taxes that you saved. Also, you must itemize in order take the deduction.
