Charitable Deductions for Trusts
How It Affects Your K-1
When a trust makes a charitable contribution, it does not work the same way as when you donate from your personal checking account. The rules are different, the deduction belongs to the trust, and the benefit flows to you indirectly through a smaller K-1.
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The trust deducts it, not you
If you are a beneficiary of a non-grantor trust, and the trust makes a charitable contribution, that deduction belongs to the trust. You cannot claim it on your personal tax return. The trust takes the deduction on its Form 1041 under §642(c), which is a completely different code section than the §170 deduction you claim on your 1040.
This surprises some people. If the trust writes a $10,000 check to a charity, you might expect to see a charitable deduction somewhere on your K-1. You will not. Instead, the benefit shows up indirectly: the trust’s charitable deduction reduces its distributable net income (DNI), which means less taxable income is allocated to you.
How it helps you
DNI is the measure of how much of the trust’s income gets passed through to beneficiaries. When the trust claims a charitable deduction, DNI goes down. Lower DNI means the trust has less income to allocate on your K-1.
For example, if the trust has $100,000 of gross income, makes a $20,000 charitable contribution, and distributes the rest to you, the trust’s DNI is reduced by that $20,000. You would report $80,000 on your K-1 instead of $100,000. The charitable deduction saved you tax on $20,000 of income, even though you never personally made a charitable gift.
The trust’s rules are different from yours
On your personal return, charitable deductions are governed by §170. You face percentage-of-AGI limits (typically 60% for cash contributions to public charities), a 0.5% AGI floor (contributions below 0.5% of your AGI are not deductible, starting in 2026 under the One Big Beautiful Bill Act), a 35% cap on the tax benefit of the deduction, and you can carry unused deductions forward for five years.
The trust plays by different rules under §642(c):
- No percentage limits. The trust can deduct up to 100% of its gross income in charitable contributions
- No carryforward. If the deduction exceeds gross income, the excess is lost
- Must come from income. The contribution has to come from the trust’s gross income, not from principal (corpus). A gift from principal generates no deduction
- Must be authorized. The trust document has to include language allowing charitable giving. Without it, no deduction is available
Grantor trusts are different
If you created a trust and it is treated as a grantor trust for tax purposes, the rules above do not apply. A grantor trust is disregarded for income tax: all of its income, deductions, and credits flow through to your personal return. If a grantor trust makes a charitable contribution, you claim the deduction on your 1040 under §170, subject to your own AGI limits and carryforward rules.
The §642(c) rules apply only to non-grantor trusts and estates.
If you are creating a trust
If you are setting up a new trust and you want it to have the ability to make charitable contributions, make sure your attorney includes language in the trust document authorizing the trustee to make charitable gifts. This is a drafting issue, and it has to be in the governing instrument. A trustee resolution or beneficiary agreement is not enough.
Broad language works. It does not have to name specific charities. But it has to be there. If it is missing, the trust can still give to charity, but it cannot deduct the contribution.
Frequently Asked Questions
Does the trust’s charitable deduction affect my K-1?
Yes. When a trust makes a charitable contribution that qualifies for a deduction under §642(c), it reduces the trust’s distributable net income (DNI). DNI determines how much taxable income flows through to beneficiaries. A smaller DNI means less income reported on your K-1, and less tax on your personal return. In effect, the trust’s charitable giving benefits you as a beneficiary by shrinking the taxable income that gets allocated to you.
Can the trust deduct charitable contributions the same way I can?
No. Trusts follow different rules. On your personal return, you deduct charitable contributions under §170, subject to percentage-of-AGI limits (typically 60% for cash) with a five-year carryforward. Trusts deduct under §642(c), which has no percentage limits but also no carryforward. And the trust can only deduct contributions that come from gross income (not principal) and that are authorized by the trust document. These are completely different mechanics.
What if I set up a trust and want it to give to charity?
Make sure the trust document includes language authorizing the trustee to make charitable contributions. Without that authorization, the trust cannot claim a deduction under §642(c), even if the contribution is made and even if the charity is legitimate. This is a drafting issue, and it needs to be addressed when the trust is created (or amended, if the trust allows amendments). If you are creating a new trust and anticipate charitable giving, tell your attorney to include charitable giving authorization.
Can I just take the charitable deduction on my personal return instead?
Not for contributions the trust makes. If the trust (a non-grantor trust) writes a check to a charity from trust funds, that is the trust’s contribution, not yours. You cannot claim it on your personal return. The deduction belongs to the trust under §642(c). The only situation where you could claim a trust-related charitable deduction on your own return is if the trust is a grantor trust, meaning you are treated as the owner for tax purposes. In that case, all the trust’s income and deductions (including charitable contributions) flow through to your personal return.
Related services
Individual Tax Return (1040)
Your personal return, where the trust’s K-1 income is reported.
Charitable Trust Distributions
Receiving payments from a CRT or CLT is a different topic. This is about the trust’s deduction for its own charitable giving.
Grantor Trust Returns
If the trust is a grantor trust, you claim the charitable deduction on your 1040 under §170, not §642(c).