Donations/Charity – what are the tax benefits?

  • by admin
  • November 23, 2021

When you donate you save tax. However, it is difficult to say if it is good tax planning or not as it depends on person to person. In materialistic terms yes you are getting tax benefits by helping others but in the non-materialistic term, you may think that you are getting much more than that. In this article, we are going to talk about how much you can donate for your tax purposes.


Donations and charitable giving

Your donation as an individual or corporation to a charitable organization can help those who are in need of your support, and at the same time, it will reduce your tax bill. Either as an individual or corporations making such donations are subject to some limitations based on their income. Tax savings will only apply if you make your donations to a qualified organization. You must ensure that you keep the donation receipt.

Donation by an individual

When making a cash donation, you can claim deduction on Schedule A as an itemized deduction on your income tax return, usually up to a limit of 60% of your adjusted gross income. The 60% limit can further be reduced to 50%, 30%, or 20% based on the status of your qualified organization and donation in cash or in kind. You can carry forward any unused charitable contribution to your next year’s return.

Donation by a corporation

When a corporation is donating, it can only deduct up to 25% of its taxable income. However, the excess amount of contribution can be carried forwarded and claimed in the next year.

  • If you contribute property as a donation other than cash, you can claim the amount based on the property’s fair market value.
  • Irrespective of your method of accounting, you need to contribute before the end of the year to claim your donations on your tax return.
  • If you are reporting income from Canadian sources on your US tax return, you may be able to claim deduction on your US tax return subject to limitations as per the tax law of the United States.




RKB Accounting has expertise in cross-border taxation and has been providing accounting and taxation services for the last fifteen years in Canada and USA. RKB services include incorporating a business on both sides of the border, bookkeeping, sales tax, payroll, and corporate and personal income tax. RKB’s expertise includes cross-border tax planning, long-term tax planning, helping business start-ups, business structure planning, and resolving complex tax matters. RKB a CPA(Delaware), CA(India), and CIA(USA) has over 25 years of experience in accounting and taxation in dealing with various countries in the world.

Disclaimer: Information in the blog/post/article has been presented for a broad and simple understanding. This is not legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situations. You need to contact your accountant or us for further information.


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