Are you looking for information about 501(c) (3) tax deductible contributions? Before you make a charitable donation, if you want to be able to write it off on your taxes, it's certainly important to take your time to educate yourself about the criteria that the IRS uses to determine whether or not a gift is tax deductible and what kind of documentation is necessary.
About 501(c) (3) Tax Deductible Contributions
Charitable gifts made to most nonprofit organizations that are officially recognized by the Internal Revenue Service (IRS) as having 501(c) (3) status are considered to be tax deductible contributions. Many entities that seem to have a charitable purpose are not officially recognized by the IRS as 501(c) (3) entities. Even if such organizations put the money you give to good use in the community or for a worthy cause, you will not be able to legally take a tax deduction.
Verifying 501(c) (3) Status
Before making a charitable gift, take the time to make sure that the receiving entity has the appropriate status for you to be able to legitimately take a deduction. Ask the organization to provide you with documentation of its charitable nonprofit organization status. An entity that has received 501(c) (3) approval should be able to provide you with a letter from the IRS stating that it has been recognized as a tax exempt entity.
Alternately, you may verify whether or not an organization is eligible to receive donations that are tax deductible by placing a telephone call to the appropriate IRS department. To get the information you need, call 800-829-1040.
You may also verify the 501(c) (3) status of any organization by using IRS Publication 78, which is the Cumulative List of Organizations. The online version of this publication makes it easy for you to conduct an efficient search for the organization you are looking for. Alternately, you can download the complete publication from the search page if you would rather have a hard copy of the entire document rather than searching the web based database.
Record Keeping Requirements
If you make a tax deductible donation, you must have a written receipt or other form of communication from the receiving agency or a bank record of the gift, such as a cancelled check or bank statement, to be able to take the deduction. If you are using a bank record as your receipt, the document must specify the amount of the payment, the date it was posted or paid, and the name of the recipient. It's important to note that the donor's checkbook register, or any other type of documentation prepared by the donor, is not sufficient to show proof of contribution.
Additional record keeping requirements apply for donations of $250 or greater and for donations of clothing and household goods. See IRS Publication 1771 for additional details regarding record keeping for 501(c)(3) tax deductible contributions.
Quid Pro Quo Contribution Considerations
Don't assume that every penny that you give to a nonprofit organization will be tax deductible. Many times, charitable organizations sponsor special events as a way of raising money. The money that supporters pay to attend these events is deductible only to the extent that it exceeds the value of attending the event. For example, a ticket to a $100 per person charity gala will likely include food and entertainment valued at $40. In this case, the attendee will be able to write of the difference between the value and the cost of the ticket, which is $60.
Charitable organizations are required to provide donors with a disclosure statement regarding quid pro quo value for any payments of $75 or more. The disclosure must provide an estimated value received by the donor and specify that only the excess value of the gift may be deducted from the individual's federal taxes.
