What Charities are Tax Deductible

December 23, 2013 by in category Deductions, Taxes tagged as , , , , with 0 and 0
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Donating to different charities is not only good for the charities, but it can also provide you with a deductible when tax time comes around. But not all charities are tax deductible, which means not all donations you give to charities can be claimed on your taxes. If you’re looking for more information on taxes and charitable donations, here are some tips for telling whether or not that charity is tax deductible.

What is a Tax Deductible Donation?

First of all, it helps to know exactly what a tax deductible donation. When you talk about a donation being tax deductible, it means that amount of value or value for your donation can be deducted from your taxes. It ultimately decreases the total amount of money you earned during the year, which can benefit you by either giving you a larger refund, or help reduce how much you end up paying for taxes at the end of the year. Many people are under the misconception that any type of donation is automatically tax deductible, but the organization you donated to has to be a tax deductible charity.

Non-Profit Organizations

In general, the majority of donations made to an organization that has an official non-profit status, is tax deductible. They may call themselves a non-profit or not-for-profit organization, but must be properly documented as such with the Internal Revenue Service (IRS). If they are not, they aren’t actually a non-profit and your donations might not be exempt from paying taxes. Also remember that just because an organization is tax exempt, doesn’t mean the donations are tax deductible.

Common Tax Deductible Charities

There are three main categories of organizations or charities that tend to provide you with tax deductible donations: public charities, private foundations and private operating foundations. A public charity is one that received the majority of their income from the public, the government, or even just friends or family. This is a charity getting most of their income from donations, and most donations end up being tax deductible. A private foundation will get most of their income from investments, where they use the money for grants to others. Finally, there is the private operating foundation, which is somewhere in the middle, as they are privately owned, but are a foundation donating assets to others.

Finding Out if The Donations are Tax Deductible

The first and easiest way to tell if your donations are tax deductible, is simply by asking. Most charities will give this information freely, especially if they are indeed a tax deductible charity. They know people are interested in this information prior to giving a donation, and will let you know upfront, or if you ask. Another way is to find out their official status. If they are listed as a non-profit organization or they are a private charity, donations are more than likely tax deductible.

Guidelines for Donations

The IRS also has other guidelines if you decide to deduct your charitable donations from your taxes. For one thing, you must donate cash or property, not a promise to donate. It also has to of course be from a tax exempt organization, which is one with 501(c) tax-exempt status. You also need to be able to itemize on your tax returns. Additionally, you have to have documentation or record of the donation, such as a receipt from the organization, appraisal, or canceled check.

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