Tax Benefits

While many philanthropists donate to charity to simply do some good in the world, they can also benefit from donating to charity. Many charities offer tax benefits, partnership tax benefits and tax deductions to those who donate money to charities, non profit fundraising and other similar organizations.
 

Donations that Qualify for Tax Benefits

To qualify for tax benefits from the Internal Revenue Service (IRS), those who donate to charity must itemize their deductions and must ensure they are donating to a 501(3)(c) organization. These organizations are certified to accept contributions and offer tax deductions. The IRS approves certain non profit organizations for this distinction.
 
Other organizations may not qualify donors for tax deductions, even if they are tax-exempt or defined as non profit organizations or charities.

Tax Benefit Levels and Limitations

Tax benefits vary from person to person depending on what taxation bracket they fall under. Those in higher tax brackets get higher tax benefits from donations to charitable organizations than those in lower tax brackets.
 
For example, those in the 10-percent tax bracket will get a tax benefit of $10 for each $100 that they donate, while those in the 35-percent tax bracket will get a tax benefit of $35 for each $100 that they donate. This means that the wealthy can typically afford to be more generous with charitable donations.

What Donors Need to Get Their Deductions

Donors must receive proof of their donation to qualify for a tax benefit if their donation is over $250. A "record of donation" can be in letter form or even in e-mail form and can be a bank record or communication between the donor and the organization to which he donated.
 
Donations under $250 do not require written proof, though it is generally a good idea to keep such records on hand.
 

IRS Tax Benefit Form for Donors 
To receive your tax benefit as a charitable donor, you must fill out IRS form 1040 with your taxes. Those filling out short forms or taking standard deductions cannot qualify for this tax benefit. Form 1040 can be found on the IRS Web site or can be obtained through an accountant.

What Can't Be Deducted

While some overseas charities are registered with the United States, no charitable donations can be given a tax benefit, whether international or in the United States, if the charity is not registered in the United States.
 
Additionally, volunteer time, services and other non-monetary contributions to charitable organizations are not eligible for a tax benefit.
 
Deductions for charitable donations may only be claimed in the year they were made. This applies even if a donation is put on a credit card: The tax deduction must be claimed during the year the donation was charged, not the year in which the credit card bill was paid.
 
While it is very high, there is a limit to charitable giving. Tax deductions can no longer be made when people donate more than 20 percent of their adjusted gross income to a charity or 50 percent of their adjusted gross income to a public charity. Consulting a tax adviser or accountant is necessary if you are concerned you may go over your charitable limit, as there are other complicated rules and regulations depending on income, location and other factors.
 
Resources
 
Charity Navigator (n.d.). Tax Benefits of Giving. Retrieved December 11, 2007, from the Charity Navigator Web site: http://www.charitynavigator.org/index.cfm/bay/content.view/cpid
/31.
 
Just Give (2007). Tax Benefits. Retrieved December 11, 2007, from the Just Give Web site: http://www.justgive.org/html/don_info/tax.html.