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Donors Guide To Tax Breaks

Posted by Ashley Shaw on 6/5/15 8:50 AM


The feeling of giving back to your community is a rewarding opportunity that many people don’t think twice about. The primary motivation to donate to a charity or nonprofit organization may be purely philanthropic, but gracious donors can also benefit from making donations for tax purposes. You’re generous attitude can do more than just make you feel good about paying it forward to others around you, your gifts may also help when it comes to the dreaded tax season.

Benefits to You for Giving to Your Community

By giving to charities or nonprofit organizations, you’re setting yourself up for tax benefits that help you save on your annual tax bill. In order for your donations to be deductible you must make charitable contributions to qualified organizations. Benefits of charitable contributions include:

  • Gifts to an organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions.
  • Your contribution to a charity or nonprofit is deductible in the year that it was paid.
  • There are limits to how much you can deduct -- 50 percent of your income base. If you have an adjusted gross income of $200,000, your deduction limit for that year is $100,000.
  • When making non-cash gifts, the value of the deduction is normally equal to the property’s fair market value.

How to Claim the Charitable Contribution Deduction

As tax season rolls around and you begin assessing what gifts or donations you’ve given over the past year, you’ll want to decide if they meet certain criteria in order to be tax-deductible. You have to actually donate cash or property. You must contribute to a qualified charitable organization. You must be able to itemize your donations. You must record all receipts from charity for gifts or property.

Organizations You Can Give To For a Tax Break

In order to make sure your donations are tax-deductible, you’ll want to make sure you’re giving to any of the following qualified 501(c)(3) organization types listed below: Churches and other religious organizations Educational organizations such as schools, daycare centers or youth sports Tax exempt hospitals and certain medical research organizations Publicly supported organizations such as a community chest Select private foundations that distribute all contributions they receive to public charities that promote education, arts, or offer relief to the poor, distressed or underprivileged A private operating foundation which pools all of its donations in a common fund Select membership organizations that rely on the general public for more than a third of their contributions.

What’s Not Tax-Deductible?

Often times contributions are not listed as tax-deductible because of the type of organization the gifts or donations are given to, including the following: Political parties, political campaigns, or political action committees. Fines or penalties paid to the local or state government. Contributions to foreign governments. Contributions to labor unions, chambers of commerce, or business associations. Donations to for-profit schools and hospitals. Fees or dues paid to professional associations like sporting teams. Contributions given to individual people.

Help Understand What Donating Can Do For You

In order to fully understand what donating to charitable organizations can do for you, you must donate and keep record of your donations. If you’re donating to nonprofits or charities using technology through GiveSmart, you’re automatically sent an electronic copy of your donation and receipt of payment that can be added to your list of tax-deductible items. Find out more about GiveSmart’s innovative mobile technology, and how we centralize your fundraising efforts, and provide PCI compliant payment processing and receipts. Call us today at 855-322-4483 or visit us online at

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