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AGI, Deduction Limits & Carry Forward

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Glossary

If you file income tax Form 1040 and itemize your deductions, you may be eligible to deduct gifts made to charity during the year. Depending on the charity and the types of gifts, you may be eligible to deduct gifts from 20% to 50% of your adjusted gross income (AGI).

Your adjusted gross income is the amount at the bottom of page 1 of IRS Form 1040. This represents your income minus certain deductions, such as contributions to your IRA, or health insurance if you are self-employed.

Your individual deductions may be limited to 20%, 30% or 50% of your AGI, depending on the type of property you give and the type of organization you give it to. For example, Clarkson is a "50% charity," meaning that certain gifts to Clarkson may be deducted up to 50% of your AGI.

Generally, a gift of cash will be allowed up to the maximum deduction limit. Gifts of real estate and other appreciated property may follow lower allowed limits. In any case, the allowed deduction for all of your gifts to all charities for the year cannot exceed 50% of your AGI.

If your gifts exceed any of the limits, you may “carry forward” the excess amounts for up to five additional years to deduct on your future income taxes. Current gifts are deducted before "carry forward" amounts.

With limits on deductions to different groups for different types of gifts, and the rules for using carry forward donations into future years, a donor's situation may become very complex. It is wise to consult your tax advisor before making gifts.

A good publication to read thoroughly is IRS Publication 526, Charitable Contributions. This and many other publications are available at http://www.irs.gov/. You may wish to download documents using software such as Adobe Acrobat Reader, available for free.

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This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisors and Clarkson University before making or planning your gift. (rev. 3/2014)