This is a generous time of year when I am often asked what charitable contributions are tax deductible. Even if not a qualified donation for a tax deduction giving is a wonderful thing for the giver and the receiver 🙂
A charitable contribution is a donation or gift to, or for the use of a qualified organization. To be a donation it must be a true gift. That is a voluntary transfer of money or property without receiving anything in return or expecting to receive anything in return (accept that tax deduction you may receive).
Generally donations to qualified tax exempt organizations are deductible by individuals and businesses as charitable donations. As an individual if you itemize deductions (on Schedule A) you can deduct donations to charity. If you don’t itemize there is no tax benefit. For businesses often payments to qualified organizations may actually be qualified business expenses fully deductible and not subject to limitations.
Donations can be made by cash, check, debit card, credit card or giving of any item (household items, clothing, car, boats, stocks or bonds etc.) to a qualified organization. The donations is considered made when delivery occurs. This means when a check is mailed, a credit card is charged or an item is sent, transferred or delivered to the qualified organization. Regardless of how the donations is made you must have a bank record or written receipt from the qualified organization as documentation to claim the donation to the qualified organization.
Churches and government are automatically qualified organizations. Most other organizations will have applied to the IRS for designation as a qualified organization and can provide you with that information. Additionally you can look up most qualified organizations here. Contributions to non-qualified organizations are not tax deductible charitable donations.
When business make payments to qualified or non-qualified organizations they must determine if it is a gift of if they are receiving something in return. Often these expenses are actually advertising or promotional expenses and not a donation.
Contributions to political organizations or candidates are NEVER tax deductible.
Additional information can be found in IRS Publication 526.
To assure your contribution qualifies be sure to discuss your donation with your CPA prior to making the donations.