According to the U.S. Treasury, charitable organizations that are exempted for a tax deduction, are non-profit organizations that pursue philanthropic and civic activities. With that being said, not all non-profit organizations have tax exemption benefits. They must comply with the requirements demanded by the Internal Revenue Service (IRS). There are a series of preconditions to be met by an applying organization. To verify if the potential receiver of your donation is certified, you can look it up on the Arizona Department of Revenue.
To qualify, donate to a certified, eligible QCOs and QFCOs. Arizona has also offered additional tax credits that individual taxpayers can combine for a decrease in tax liability. Learn now and control where your taxes go!
WHY IS IT WISER TO DONATE IN A QUALIFIED CHARITABLE ORGANIZATION?
One of the most important terms that an applying charitable foundation must meet is stated on the Internal Revenue Code under section 501(c)(3) which says that none of the earnings of the organizations may inure to any private shareholder or individual and it may not participate in any form of campaign activity for or against the political candidates. The organization is tax-exempt, but donations to them are also deducted from the donor’s tax.
This is important because of the benefits it may bring to you. Donating can be deeply rewarding. People worldwide support causes they believe in, and it has a positive effect on their lives. It gives you a satisfying feeling knowing that you have given your money to the right people. It increases your confidence in volunteerism and inspires you to give more to communities that are in great need.
But aside from this, here are more reasons why:
- Donating to a qualified charitable organization instead of a non-qualifying humanitarian group can give you more incentives. With a qualified organization, you get tax deductions for every dollar. Depending on the charity, usually, they offer a 33.33% tax deduction. At the same time, some are generous enough to offer a dollar-to-dollar credit. You can maximize your tax reduction by lowering your income tax expense. While you gave a share to help those who are in need, at the same time, you also get to save money on taxes.
- Another way of saving money from taxes is to donate household commodities and used goods to qualified organizations. So if you are short on cash, non-cash donations can be converted to a tax deduction! A written receipt is what you need from the foundation for all your non-cash donations with a list of items and the estimated value. You decluttered your house yet get tax credits for it. Indeed, hitting two birds with one stone!
Are you planning to donate for tax deduction? Remember to get a receipt for your donations to strengthen your tax records as proof of the audit.