It’s my annual “Taxes from A to Z” series! For the series, I’ll focus on terms that you might see on your tax forms and statements but not necessarily in the headlines. If you’re wondering whether you can claim wardrobe expenses or whether to deduct a capital loss, this is one series you won’t want to miss.
Q is for Qualifying Charitable Organization.
Making a charitable donation is not only a chance to make a difference: it’s also an excellent way to reduce your tax burden for the year. When you make a gift to a qualifying charitable organization, you can claim a charitable deduction on your tax return – assuming that you itemize.
A qualifying charitable organization is one that qualifies for tax-exempt status under the Tax Code and is operated exclusively for religious, charitable, scientific, literary or educational purposes, or for the prevention of cruelty to animals or children, or the development of amateur sports. If you’re not sure whether an organization is qualified, ask to see the organization’s IRS determination letter (many organizations will post the letter on their website) or call the IRS at 1.877.829.5500. You can also search online using IRS Exempt Organizations Select Check.
Keep in mind that churches, synagogues, temples, and mosques are considered de facto charitable organizations and are eligible to receive deductible donations even if they’re not on the list (some exceptions apply so be sure and ask if you’re not sure). Additionally, federal, state and local governments can be considered qualified charitable organizations, so if you want to help pay down the national debt, feel free to whip out your checkbook.
Gifts to political organizations and campaigns won’t qualify for the charitable deduction and neither will donations to specific individuals – no matter how deserving. This includes handouts to the homeless and collections at the office or in your neighborhood for those experiencing tough times (including pooled funds for folks who are ill or have experienced a tragedy such as an accident or fire). If the deduction is important to you, consider working through an established qualifying charitable organization like the Red Cross which provides disaster or other relief.
For more tips on making your charitable gift count, click here.
