While recent changes in the tax code have made it less attractive to donate to charity due to an increase in the standard deduction, for some taxpayers, there are still some benefits to be had from donations, depending on your specific tax situation. However, it’s always important to remember that not every donation you make can be tax deductible. There’s a few crucial questions you want to ask that will help you determine whether a given deduction is going to qualify.
First, you need to verify that the organization you’re donating to qualifies as a tax deductible one. While it’s true that most religious or veterans organizations qualify, some organizations might use a name that indicates such an affiliation while not actually qualifying. You can ask the organization directly if they qualify for tax deductible status, but if you have reason to be concerned, the most certain way to verify if an organization qualifies as tax deductible is to check their registration on the IRS website’s tax exempt organization search here. There are some caveats to note, however. Some churches, group ruling subordinates, and governmental units, and other organizations may qualify but not be listed on the IRS website. Information about those groups can be found on the IRS website here.
Once you’ve verified that the organization you are donating to qualifies, you’ll need to make sure that the donation you’re making does as well. If you receive any kind of goods or services in return for your donation, the value of those goods or services would need to be deducted from the value of your donation. For instance, if you sign up to sponsor a non-profit organization and in return receive a welcome basket with items worth $25, that amount would need to be excluded from your tax deduction. If you are donating to a charity as part of raising money for a trip, such as a missions trip, you might be able to deduct those costs, depending on the itinerary of the trip. According to IRS Publication 526, “Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel.” So your deduction would be depending on the trip not having a “personal pleasure, recreation, or vacation” to it.
Ultimately, it’s crucial that before taking any deduction, you’ve carefully checked the relevant legal guidelines as well as your own personal tax situation. The best way to have peace of mind about your taxes is to schedule an appointment with us today. Our tax professionals will ensure your taxes and your deductions are filed correctly and you get the full return you are due.