Especially on the Internet, you’ll find many organizations and individuals who request donations, if only via a PayPal link on their web sites. Of course, this doesn’t mean that the IRS considers such donations a charitable contribution, and you have to be careful what you claim on your taxes. A good rule of thumb is to only make donations to 501(c)3 non-profit organizations, but there are other instances in which your charitable donations are tax deductible.
First, you should know that the IRS has a fairly vague definition of a charitable contribution, and includes any monetary or physical donation that one contributes voluntarily and without expectation of something in return. This, of course, could mean handing ten bucks to your teenager for a movie at the cinema, and doesn’t state all of the criteria. If you want to claim a donation on your taxes, you have to make sure the IRS considers it a charitable contribution.
Religious organizations and charities are the most common recipients of monetary donations. When you give money or goods to the Salvation Army, the Good Will or a missionary group, you can take the value of those donations from your taxes. The IRS also considers most donations to hospitals, medical research facilities, parks and wildlife facilities, civic defense funds and lodge-system fraternal groups as charitable donations, but it always helps to inquire first.
You should also know that certain expenses can qualify as a charitable contribution, such as expenses incurred while volunteering for one of the aforementioned organizations or sponsoring a foreign-exchange student. However, when you give money to your favorite political candidate or when you donate to your homeowners’ association, those cannot be claimed on your taxes, so be careful.
The IRS likewise does not consider lottery tickets, college tuition, utility bills, country club dues or services rendered for free as charitable contributions. Anything that benefits the consumer directly or has the potential to benefit the consumer are generally not tax-deductible, and if the recipient benefits monetarily for a non-charitable purpose, I would cross that organization off your list as well.
Furthermore, don’t assume that just because an organization or individual has a ‘Please Donate’ button on their web site, that the IRS will consider it a charitable donation. Perhaps it’s a legitimate request, and maybe the donation will benefit someone down the line, but the IRS keeps a list of approved recipients on Publication 78, which can be located at your local library or tax office. If the name isn’t on the list, assume that it doesn’t qualify.
If you have any questions at all about whether the IRS will consider a donation a charitable contribution, check with your tax accountant or attorney before you send any money or goods. This is a good rule of thumb even for major organizations, because there are plenty of fraudulent web sites that claim to be representatives of the Salvation Army or Good Will, but are actually run by scam artists.
