Charity Donations and Tax Deductions

by Dual Income No Kids on February 16, 2010 · 4 comments

As the news dies down for Haiti, the need certainly remains. We thought you might be interested in some of the ins and outs for what you can and can’t claim on your taxes.

The US House and Senate unanimously passed a bill in January that allows taxpayers to write-off donations to Haiti earthquake relief efforts when they file their 2009 taxes this coming April. Under current law, donors would have to wait until they file their 2010 returns next year to take the deductions. The bill allows donations made by the end of February to be deducted from 2009 returns. This means you only have another couple of weeks to act, but you can always claim on your 2010 taxes.

What you CAN deduct for charitable contributions:

· Money or property you give to: Churches, synagogues, temples, mosques, and other religious organizations.
· Federal, state and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt.)
· Nonprofit schools and hospitals
· Public parks and recreation facilities
· Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girl Scouts, Boys and Girls Clubs of America, etc.
· War veterans’ groups
· Charitable organizations listed in Publication 78, which list those that qualify
· Expenses paid for a student living with you, sponsored by a qualified organization
· Out-of-pocket expenses when you serve a qualified organization as a volunteer

What you CAN’T deduct for charitable contributions:

· Civic leagues, social and sports clubs, labor unions, and chambers of commerce
· Foreign organizations (except certain Canadian, Israeli, and Mexican charities)
· Groups that are run for personal profit
· Groups whose purpose is to lobby for law changes
· Homeowners’ associations
· Individuals
· Political groups or candidates for public office
· Cost of raffle, bingo, or lottery tickets
· Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups
· Tuition
· Value of your time or services
· Value of blood given to a blood bank

For 2009 tax returns, if your adjusted gross income is more than $166,800 ($83,400 if you are married filing separately), you may have to reduce the amount of certain itemized deductions, including charitable contributions. For more information and a worksheet, see the instructions for Schedule A (Form 1040).

Being in the aid business myself, if you are looking at making a donation, I would recommend an organization that is on the ground and doing some excellent work, International Medical Corps. Keep in mind that you can also donate physical property, such as a boat, and receive the same benefits that you would when donating cash. As long as you donate your boat to a non-profit organization, you can claim the donation as a tax deduction at its full market rate. The boat is then used to fund various programs and charities around the country. The charity that you make your boat donations to will usually come to pick the boat up from your home or storage location, which gives you one less thing to worry about as you unload your vessel.

Give back, it feels good.



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{ 4 comments… read them below or add one }

1 Anonymous February 16, 2010 at 12:10 pm

Is the first section supposed to be can deduct while the second section is supposed to be can't?

2 Dual Income No Kids February 16, 2010 at 12:13 pm

Anon – My bad. I don't know what happened with the editing there. I recall it being right, but who knows. Thanks for catching and commenting. Helps from others wondering.



3 Lillie February 16, 2010 at 2:39 pm

I'm glad to know that my contribution through my church is on the list. Interesting that there is still time for it to be claimed as a deduction since I have not filed my taxes yet. Unfortunately, there is still a local to be done for the victims. In fact, my local news report just featured a family talking on a cell phone to others in the affected area about 15 miles out. They have yet to be helped.

4 Anonymous February 18, 2010 at 8:34 pm

The rules on deductions for charitable donations are a major pet peeve of mine: as an expat, the US government is happy to tax the income I earn at my overseas job located a 3 minute walk from where I live… but won't allow a deduction for donations I make to my church, which is located in the same neighborhood where I live and work.

If only a US-registered charity is a legitimate deduction, then it ought to be the case that only a US-registered employer can pay a salary that constitutes legitimately taxed income. The double standard is infuriating.

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