Charitable contributions you think you can claim but can't
Gifts to a non-qualified charity or nonprofit
- Religious and charitable organizations fall under section 501(c)(3) and can receive tax-deductible donations.
- Not every section allows these deductions. For instance, social welfare and civic organizations registered under section 501(c)(4) don’t qualify.
- However, two types of 501(c)(4) organizations—veterans' organizations with 90% war vet membership and volunteer fire departments—do qualify for charitable deductions.
- For example, taxpayers often have the mistaken belief that civic and employee associations, such as certain retired worker associations and sports groups, qualify as charitable groups.
- Asking the organization about their qualification before making a contribution is recommended.
A promise to pay
The gift that's not a gift
Ill-timed contributions
- Post-dated checks with January dates that are delivered December 31 don't count as a deduction for that tax year, for example.
- You must use the current date and mail your check by December 31 if you need the deduction.
- The day you instruct your broker to transfer a stock gift to your favorite charity is not the gift date; the day the transfer goes through determines the tax year for your donation.
- However, year-end credit and debit card donations can be claimed for the tax-year in which they were given, regardless of when you pay your bill. The key date is the processing date.
Gifts that benefit you
- The price you pay for food, wrapping paper or magazines sold in fundraisers cannot be fully deducted; only the difference between your purchase price and fair market value qualifies.
- For example, paying $10 for a roll of wrapping paper from a school group that carries an $8 price tag in retail outlets gives you a $2 deduction.
- Likewise, buying a $50 ticket to a charitable event that includes a meal translates into a $20 deduction after subtracting the $30 you would have paid for that meal in a restaurant.
Politics and charitable contributions don't mix
- Candidates or committees working on their behalf
- Advertising for a candidate or their political party
- Campaign fund-raising events such as dinners and luncheons
Undocumented charitable donations
- If you make a donation of more than $250 in any one day to any one organization, your cancelled check is NOT enough.
- You'll need an acknowledgment letter dated prior to your filing your tax return for the year in which you made the donation.
- For individual non-cash gifts of $250 to $500, that proof must include written confirmation.
- For a non-cash gift between $500 and $5,000, on top of written acknowledgment from the benefiting organization, you need to document your ownership and cost and file Form 8283.
- Gifts of non-cash property valued at more than $5,000 demand additional substantiation.