We make a living by what we get, but we make a life by what we give. – Winston Churchill

It happens every tax season.  I ask a new taxpayer about their charity, and I get, “Put me down for the maximum.”  Folks, I hate to have to tell you this, but there is no maximum.  There is no standard amount for charity that you can just use as a default, absent of any documentation or even actual giving.  I confess I sometimes wonder if it might be years and years of systematic abuse of line 19 that has driven the IRS to such nitpicking specificity for the documentation of this one deduction.

Let’s start at the beginning.

Here in the USA, a lot of taxes are paid, and in a variety of ways.  For income taxes, folks are still allowed a deduction for charitable giving.  This deduction is taken on Schedule A, lines 16, 17, 18 and 19.

Line 16 is for your donations of straight money, that is, cash and checks.  The next blog post (Giving, American Style) explains the dos and don’ts for this one.

Line 17 is for your donations of “stuff.”  Stuff is actually even more complicated than cash, and is covered in 2 blog posts, 4th and 5th in this series.

Line 18 is for any carryover of unused amount from the prior year.  Yup.  It’s possible you gave so much last year that you weren’t able to deduct it all!  If that happens, you get to carry the limitation forward up to five years.  For cash donations, you are limited to 50% of your AGI, but for capital gain property, the limitation is 30% of your AGI.  Donating to a private foundation?  The limitations are 30% and 20%, respectively.

Line 19 is the total.

But wait!  Where’s the line for charity miles?  You know, driving to and from your volunteer work at the soup kitchen.  Don’t worry!  You multiply your charity miles by the charity mileage rate, and add it in with cash on line 16.  Yes, there’s a different rate for charity miles than business miles or medical miles or moving miles.  You can always find it online with a simple search.  For 2015 it is 14 cents, and as soon as I am confident of the 2016 rate, I’ll update this post.

And what about the time you spent at the soup kitchen?  Isn’t there a donation line for time?  In a word, no.  Your charitable donations are limited to money and stuff; no deduction is allowed for your time.

Why is charity limited to money and stuff?  In other words, why does it not include time?  The bottom line is, when you donate something tangible (money, stuff) you don’t get anything tangible (contracts, employment, legislation) in return.  If you received a deduction for your time, it would be like getting paid.  Sure, you get those warm fuzzies deep down inside, but that is an intangible benefit with no ready market value.  Since the IRS wants money, they stick to things that readily translate into monetary values.  (If and when they figure out how to absorb your warm fuzzies, I’m sure they will adapt the code accordingly.  Oops.  I’m off-topic.)

There is not a man of us who does not at times need a helping hand to be stretched out to him, and then shame upon him who will not stretch out the helping hand to his brother. – Theodore Roosevelt

Do your givin’ while you’re livin’… then you’ll be knowin’ where it’s goin’. – Ann Landers