Individuals and businesses traditionally contribute large amounts to both public and private charities. In many cases, a charitable contribution deduction is allowed for contributions to certain qualified organizations. The deduction is taken from the adjusted gross income (AGI), so taxpayers will need to itemize deductions instead of taking the standard deduction if they want to benefit financially from a charitable contribution.

Qualified Entities
As an organization meets the requirements of the Internal Revenue Code (IRC), Section 501(c) (3) contributions to the organization are exempt from federal income tax since they meet the criteria as a "qualified charitable organization." These organizations are then classified even further as public charities or private foundations.

Individuals can deduct donations on the tax return for the year the donation was made, provided that the entity is a qualified organization. The deduction is taken directly on Schedule A of the federal tax 1040 Form. If you're in the 25% tax bracket, a qualified donation of $1,000 can reduce your tax liability by $250.



Public Charities

Related Articles
  1. Taxes

    Tips on Charitable Contributions: Limits and Taxes

    An overview of the limits and tax deductions of charitable donations.
  2. Taxes

    Are You Getting a Tax Deduction for Your Donation?

    When done properly, a charitable donation of your RMD can equal a tax deduction for you.
  3. Financial Advisor

    Non-Cash Contribution Rules Could Cut Returns

    Higher standards for certain contributions could mean smaller deductions for you.
  4. Taxes

    An Overview of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  5. Taxes

    Do Your Research Before Claiming These Deductions

    Be sure to read the fine print about any deduction or credit that you’re planning to claim.
  6. Taxes

    Donations: How To Maximize Your Tax Deduction

    Donating to charity is a great way to show your giving spirit and save money on your taxes at the same time.
  7. Taxes

    Why You Should Itemize Your Tax Deductions

    This strategy of moving your tax deductable payments and donations to the following year could mean hundreds more on your return.
  8. Taxes

    Give To Charity; Slash Your Tax Payment

    Being generous has never been more (financially) rewarding!
  9. Taxes

    Tips for Effective Charitable Giving Before Year-End

    Before donating, here are some helpful tips to protect both your wallet and generous heart.
  10. Taxes

    Cut Your Tax Bill

    Paying your bills early or giving an extra donation now can help you come tax time.
Frequently Asked Questions
  1. What is the difference between yield and return?

    While both terms are often used to describe the performance of an investment, yield and return are not one and the same ...
  2. What are the Differences Among a Real Estate Agent, a broker and a Realtor?

    Learn how agents, realtors, and brokers are often considered the same, but in reality, these real estate positions have different ...
  3. What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally ...
  4. Which is better, a fixed or variable rate loan?

    A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ...
Trading Center