There are only certain categories of nonprofit tax-exempt organizations that are qualified for tax-deductible charitable contributions. The list includes most of the charities from section 501(c)(3) of the Internal Revenue Code, and, in some circumstances, fraternal organizations, volunteer fire departments, and veterans organizations. A contribution for an exclusively public purpose to a State or its political subdivision may be deducted; this includes an Indian tribal government, when treated as a state, and particular political categories of that government.

Do your homework and know the unique qualifications of your nonprofit organization or the charity for which you are contributing.

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Labels: charitable contribution, charitable donation, tax deductible donation

If you and/or your business are making year-end contributions to charity, you must keep in mind certain tax law provisions. Provisions regarding proper reporting for individual and business taxpayers and certain Individual Retirement Arrangement (IRA) owners seeking to claim tax deductible donations are of special interest. The IRS offers valuable tips on these provisions in its newsroom article, “IRS Offers Tips for Year-End Donations” at http://www.irs.gov/newsroom/article/0,,id=201076,00.html.

Firstly, the IRS describes provisions outlining rules for donating clothing and household items, and guidelines for monetary donations. To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following useful reminders:

• Contributions are deductible in the year made.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. The searchable online listing of qualified organizations can be found at IRS.gov under Search for Charities.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property.
• The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

Secondly, the IRS details provisions regarding how IRA owners, age 70 ½ or over, may contribute up to $100,000 per year to an eligible charitable organization tax-free. See IRS Publication 590, Individual Retirement Arrangements (IRAs), for more information on qualified charitable distributions at: http://www.irs.gov/pub/irs-pdf/p590.pdf.

Another useful resource is the online mini-course, "Can I Deduct My Charitable Contribution?" (a 20-minute presentation) found at: http://www.stayexempt.org/mini-courses/canIDeduc/player.html

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Labels: charitable contribution, charitable distribution, charitable donation, IRA, IRS, tax deductible donation, tax exempt organization