Charitable contributions are good for your company, and they are good for you. They also help people who need it. But there are things you need to know before you claim charitable deductions on your tax returns.
First, if this is a small, local charity, before you make a donation, ask for the Tax Exemption ID of the Charity you are making a contribution to. You will need that information to substantiate that you have indeed donated to a bona fide Charity. You should have a record of the check or credit card charge, the Name of the Charity, the date of the contribution and of course the amount you contributed.
Here are some guidelines taken directly from the IRS.gov website:
“Generally, only the following types of organizations can be qualified organizations.
- A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto
Rico). It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Certain organizations that foster national or international amateur sports competition also qualify.
- War veterans’ organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico).
- Domestic fraternal societies, orders, and associations operating under the lodge system. (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.)
- Certain nonprofit cemetery companies or corporations. (Your contribution to this type of organization isn’t deductible if it can be used for the care of a specific lot or mausoleum crypt.)
- The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. (Your contribution to this type of organization is deductible only if it is to be
used solely for public purposes.)
Example 1. You contribute cash to your city’s police department to be used as a reward for information about a crime. The city police department is a qualified organization, and your contribution is for a public purpose. You can deduct your contribution.
Example 2. You make a voluntary contribution to the social security trust fund, not earmarked for a specific account.
Because the trust fund is part of the U.S. Government, you contributed to a qualified organization. You can deduct
If you are still not certain which of your contributions are deductible, make an appointment with Anthony or Matt and we can help with this and any other of your tax issues.
McCain and Samons
CPA’s Vero Beach, Tax preparation, forensic accounting, business consultations