Giving back can be very rewarding and can also benefit you when tax season comes around. While it’s important to give to a charity based on their cause and effectiveness to change, it’s also good to know which charities are tax-deductible since there are contributions that are non tax-deductible.
The only charities that are tax-deductible are qualified charities. Although the charity of your choosing may be an established organization, you might not be able to write it off on your taxes. If you are unsure whether or not the organization is deductible on your taxes, take a look at the organization’s determination letter from the Internal Revenue Service (IRS). Most of the time the charity will have this letter available on their website.
If you are unable to find the information on their website, the IRS offers a tool called the Tax Exempt Organization Search (TEOS). Some organizations may not be listed but are still, in fact, tax-deductible. Donations made to de facto charitable organizations, such as churches, mosques, temples or synagogues may be deducted from your taxes.
Keeping the qualified charities in mind, it’s also important to know which charities typically are not tax-deductible. Any donations to individuals cannot be deducted from your taxes. This means giving money to the homeless and any donations made in your neighborhood or office to sick or struggling individuals are not tax-deductible. Many people think that donations made on web pages like GoFundMe may be deducted from their taxes, but they are not.
If the donation is not given to an official organization, then it cannot be written off on your taxes. Although giving to individuals is a great way to help someone out of tough times, it is not a donation that is tax-deductible.
Keep a Record
Whether the donation was made through cash, credit or check–no matter the quantity–always keep a record. Each time you donate, get a receipt for it. Especially for cash donations, they must be substantiated by a bank record that is annotated with the name of the charity or you must get something in writing from the organization. These receipts must have the date, the amount of the donation, and the name of the organization that received your gift.
Be sure to give to an organization or charity that deserves your donation, but keep in mind the donation might also be tax-deductible.