Ensuring Charitable Contributions are made to Qualifying Organizations

Tax Act

The Internal Revenue Service (IRS) grants organization eligibility in receiving donations and giving them a tax-deductible status.  Qualified organizations meet requirements upon obtaining the status that allows taxpayers to claim charitable deductions.  You may ask the organization about their status in which they should be able to provide you with details.  There is also a listed publication (IRS Publication 78) available through the IRS that lists qualifying organizations.

The most common way in determining if the organization is qualified is to review organization types.  There are 5 general types of organizations that will have an assigned status such as a 501(c)(3) or other similar that makes the organization qualify:

Community foundations, trusts and organizations organized with specific purposes including religious, charitable, educational, literary, scientific, animal/human cruelty and sports related organizations.

  1. Organizations for war veterans including posts, trusts, foundations and auxiliaries organized in the United States.
  2. Many fraternal societies in relation to organization types mentioned in number 1 may be consider a qualify organization.
  3. Cemetery nonprofits and cooperation’s.
  4. A political subdivision or Indian tribe government that performs government actions. This may include donations made to the police department toward a reward in solving a crime or an organization that collects voluntary contributions for the social security trust fund.

Examples of organizations include church ministries, temples, charitable organizations such as the Red Cross, nonprofit educational groups such as the Boy/Girls Scouts, medical research organizations, public parks and civil defense organizations.  The IRS provides detailed information on contributions made to organizations outside the United States. Donations made are usually listed as an itemized deduction on your federal income tax form.  There are limitations based on your income of how much you can claim.  It is a good idea to obtain a receipt or documentation from the organization to use upon filing.  Many organizations do this automatically upon receiving your donation.

If your donation is goods or property, the value is determined based on fair market value when the donation was made.  If you volunteered a certain number of hours, they may also count as a deduction as long as they work performed was with a qualifying organization and you have proper documentation that shows logged hours. It is important to understand the value of charitable donations since the amount you contributed may vary from the amount you report in the form.  Many charities will mention what the tax deductible portion of your donation will be.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to umbrella companies .


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