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Can I deduct charitable contributions on my tax return?
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| When making charitable contributions to qualified organizations, a
tax deduction is
generally available for those charitable contributions for taxpayers who itemize tax
deductions on their tax return, provided, in most cases, the
total tax deduction on the taxpayer's tax return does not exceed ˝ of
the taxpayer's Adjusted Gross Income. Excess tax deductions for
charitable contributions may be carried
forward to future tax returns for five tax years. You can deduct your
charitable contributions on your tax return only if you make the
charitable contributions to a qualified organization. To become a qualified
organization and accept tax deductible
charitable contributions, most
organizations other than churches and governments, as described below, must apply to the
IRS.
Restrictions on Charitable Contributions made after August 17, 2006
Cash contributions
All cash contributions made in tax years beginning after August 17, 2006, to any qualified charity must be supported by a dated bank record or a dated receipt. The tax year for most individual taxpayers begins on January 1.
Clothing and household items
Beginning with contributions made after August 17, 2006, no deduction is allowed for most contributions of clothing and household items unless the donated property is in good used condition or better.
Charitable
Contributions - IRS Publication 78
You can ask any organization
you intend to make charitable contributions to whether it is a qualified
organization, and most will be able to tell you. Or you can check Publication 78
prior to making a
charitable contribution, which
lists most qualified charitable organizations. You may find Publication 78 in your local library's
reference section. If not, you can call the IRS tax help telephone number shown for your
area in your tax package to find out if a charitable organization is
qualified to accept tax deductible
charitable contributions.
Charitable Contributions - Types of Qualified
Charitable Organizations
Generally, only the six following types of
charitable organizations can be qualified charitable organizations and
accept tax deductible
charitable contributions.
 | The United States, a U.S. Possession, a state, city, or town, or Indian tribal
government; |
| A community chest, corporation, trust, fund, or foundation organized or created in or
under the laws of the United States, any state, the District of Columbia, or any
possession of the United States (including Puerto Rico). It must be organized and operated
only for the following purposes: |
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Religious, |
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Charitable, |
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Educational, |
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Scientific, |
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Literary purposes, or |
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For the prevention of cruelty to children or animals; |
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Certain organizations that foster national or international amateur sports
competition also qualify; |
| Domestic non-profit veterans' organizations or auxiliary units; |
| A domestic fraternal group operating under the lodge system; |
| Nonprofit cemetery and burial companies (your
charitable contribution must benefit the whole
cemetery, not your burial plot); |
| Legal services corporations organized under the Legal Service Corporation Act. |
Charitable Contributions -
Examples
Qualified
charitable organizations that can accept tax deductible
charitable contributions include:
| Churches, a convention or association of churches, temples, synagogues, mosques, and
other religious charitable organizations, |
| Most nonprofit charitable organizations such as the Red Cross and the United Way, |
| Most nonprofit educational
charitable organizations, including the Girl (and Boy) Scouts of
America, colleges, museums, and day-care centers if substantially all the child care
provided is to enable individuals (the parents) to be gainfully employed and the services
are available to the general public. However, if your charitable contribution is a substitute for
tuition or other enrollment fee, it is not tax deductible on your IRS
tax return as a charitable contribution, as
explained next under Charitable Contributions You Cannot Deduct, |
| Nonprofit hospitals and medical research
charitable organizations, |
| Utility company emergency energy programs, if the utility company is an agent for a
charitable organization that assists individuals with emergency energy needs, |
| Nonprofit volunteer fire companies, |
| Public parks and recreation facilities, and |
| Civil defense charitable
organizations. |
Charitable Contributions You Cannot Deduct
on Your Tax Return
Charitable contributions you cannot deduct
on your tax return at all include charitable contributions made to specific
individuals, political organizations and candidates, the value of your time or services
and the cost of raffles, bingo, or other games of chance. You cannot deduct
on your tax return charitable contributions
that you give to qualified charitable organizations if, as a result, you receive or expect to receive
a financial, or economic benefit equal to the charitable contribution.
Although you cannot deduct on
your tax return the value of your time or services, you can deduct on your tax return the
expenses you incur while donating your services to a qualified charitable organization. If the
expenses are for travel, which may include transportation and meals and lodging while away
from home, they may be deducted on your tax return only if there is no significant element of personal
pleasure, recreation, or vacation in the travel. Actual costs of gas and oil can be
deducted on your tax return, or you can choose to take 14˘ per mile for using your own car. For more
information see, IRS Publication 463,
Travel, Entertainment, and Gift Expenses.
Charitable organizations must provide donors with contemporaneous written
acknowledgment of all charitable contributions valued at $250 or more. Donors are responsible for
requesting this substantiation of the charitable contribution from the charitable organization. In addition,
charitable organizations must disclose the
value of any benefits provided when a charitable contribution of more than $75 includes some benefit
(e.g., a fund-raising dinner or entertainment). The value of the goods or services
received is not tax deductible on your tax return.
Charitable Contributions - Canadian
charities
To deduct your
charitable contribution to a Canadian charity,
you generally must have taxable income from sources in Canada. See IRS Publication 597, Information
on the United States-Canada Income Tax Treaty, for information on how to figure your
tax deduction on your tax return.
Charitable Contributions -
Mexican charities
You may be able to deduct
on your tax return charitable contributions to certain Mexican
charitable organizations under an income tax treaty with Mexico. To deduct your
charitable contribution to a Mexican charity on your tax return, you must have taxable income from sources in
Mexico. The charitable organization must meet tests that are essentially the same as the tests that qualify U.S.
charitable organizations to receive tax deductible charitable contributions. The
charitable organization may be able to tell
you if it meets these tests. If not, you can get general information about the tests the
charitable organization must meet by writing to the:
IRS
Assistant Commissioner (International)
Attention CP:IN:D:CS
950 L'Enfant Plaza, SW
Washington, DC 20024.
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Related tax
information about charitable contributions |
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Non-cash Charitable Contributions
Itemized Tax Deductions Directory |
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IRS publications about charitable contributions:
For more information, see IRS Publication
526, Charitable Contributions, and for information on determining value, see
IRS Publication 561, Determining
the Value of Donated Property. Also see IRS Publication 17,
Your Federal Income Tax. |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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