We are getting closer and closer to year end and we are ready to help our most beloved charitable organizations but……do we know which of them qualify for deductions?
Only the five following types of organizations can be qualified organizations and they are:
- Community Chest
- War Veterans Organizations
- Domestic Fraternal Societies
- Certain Cemeteries
- Government Organizations
Let me give you a little explanation:
- 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 be organized and operated only for one or more of the following purposes.
- 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.
- Domestic fraternal societies, orders, and associations operating under the lodge system.
Note. 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.
Note. Your contribution to this type of organization is not 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.
Note. To be deductible, your contribution to this type of organization must be made 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 your contribution.
Examples. The following list gives some examples of qualified organizations.
- Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.
- Most nonprofit charitable organizations such as the Red Cross and the United Way.
- Most nonprofit educational organizations, including the Boy (and Girl) Scouts of America, colleges, museums, and daycare centers if substantially all the childcare provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct.
- Nonprofit hospitals and medical research organizations.
- Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs.
- Nonprofit volunteer fire companies.
- Public parks and recreation facilities.
- Civil defense organizations.
Canadian charities. You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada.
To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction.
Mexican charities. You may be able to deduct contributions to certain Mexican charitable organizations under an income tax treaty with Mexico.
The organization must meet tests that are essentially the same as the tests that qualify U.S. organizations to receive deductible contributions. The organization may be able to tell you if it meets these tests.