Nonprofits are the backbone of keeping our community grounded.
Especially with how polarizing 2020 has been, a lot of people feel they want to contribute in some way to the causes they care about. Doing this is not only a great way to give back, but also potentially reduce the amount you’ll owe on your taxes at the end of the year. That’s why we’ve put together a helpful guide on what to know about nonprofit donations. Here’s what you need to know:
They’ve got to be a 501c organization.
While this might seem like a no-brainer, people sometimes ask if they can write-off any GoFundMe donation or give away. Unfortunately, the only donations the IRS recognizes are those to 501c charitable organizations. Granted, that’s not to say those funds aren’t worth it, however, they aren’t exactly deductible from your taxes. Instead, vary up what you give out if you find yourself in a giving mood.
Not every cash transaction with a nonprofit is tax-deductible.
Granted, even if you are dealing with a 501c nonprofit, not every single action with them is considered tax-deductible. For example, despite that they’re both food items, buying a water bottle at a nonprofit-hosted block party is not deductible, but buying a ticket to a charity dinner is. Why is this the case? One is a large enough cash amount that can be applied to an already tax-deductible transaction (buying a meal), while the other is too small. Another popular example is raffle tickets or bingo cards, which are also not deductible.
The safest route to go instead is simply donating to a nonprofit directly or going after a method that gives you a sizable receipt, proving to your accountant something tangible.