Qualified Charity

When you donate to charity, the tax code allows you to deduct your contribution on your tax return only if the charity is qualified. To be considered a qualified charity for federal income tax purposes, a charity must meet the following requirements:

  • There are eight categories of activity that make an entity eligible to receive charitable donations: charitable, educational, religious, scientific, literary, testing for public safety, fostering national or international amateur sports programs, and preventing cruelty to children or animals

  • No part of the organization's earnings can benefit any private shareholder or similar individual

  • The organization cannot attempt to substantially influence legislation or participate in, publish, distribute statements for, or intervene in any political campaign on behalf of any candidate seeking public office

Caution: Note that the statutory definition of qualified charity for federal income tax purposes is not the same as the definition of qualified charity for federal estate and gift tax purposes. One distinction is that, for income tax purposes, the charity must be a domestic organization, and for estate tax purposes, the charity can be either a domestic or foreign organization. Make sure your charity is considered a qualified charity under the income, gift, and estate tax sections of the Internal Revenue Code. If in doubt, consult a tax specialist.

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