Date posted: June 5, 2008
I received $140,000 in tax-free income from a personal injury suit. If I give 10% to charity, can I deduct it?
I received $140,000 in tax-free income from a personal injury suit. If I give 10% to charity, can I deduct it?
— Submitted by James
A charitable donation of cash is deductible, even if the money comes from a tax-free source, such as an inheritance, insurance proceeds, or a personal injury settlement. To deduct the donation:
- The funds must go to an IRS-approved charity.
- You must obtain an acknowledgment from the charity (since the gift exceeds $250, your canceled check or bank statement isn't sufficient).
- You must itemize deductions.
- The amount of the deduction can't exceed 50% of your adjusted gross income. However, if the deduction is limited this year because of the AGI limit, you can carry the excess forward for up to five years.