Is Your Giving Tuesday Donation Tax-Deductible?
Giving Tuesday is today, the first Tuesday following the Thanksgiving holiday. While not officially a day of recognition, Giving Tuesday is championed by the non-profit group GivingTuesday.org, and it has become a day on which many people choose to make their charitable donations for the year. Many companies make donations as well, with many matching the gifts made by their employees.
While donations made on Giving Tuesday are tax-deductible, the Internal Revenue Service (IRS) wants taxpayers to know that not all donations qualify for charitable deductions. The IRS provided an overview of the criteria for tax deductibility in a recent Tax Tip published on November 15, 2022. Here is an overview of some of the key considerations:
Some Donations Are Not Tax-Deductible
As the IRS notes, “[t]here are some contributions that aren’t tax deductible.” Generally, for a charitable donation to be deductible, the donation must be made to a non-profit organization that performs charitable work. As a result, donations to the following organizations on Giving Tuesday do not entitle taxpayers to charitable deductions:
- Charitable remainder trusts
- For-profit companies
- Private foundations
- Supporting organizations (these are charitable organizations that “carr[y] out [their] exempt purposes by supporting other exempt organizations”)
Most exempt organizations will provide donors with the paperwork they need to substantiate their charitable deductions. But taxpayers can also check organizations’ tax-exempt status using the IRS’ Tax Exempt Organization Search.
Cash Donations, Property Donations and Unreimbursed Volunteer Expenses Are Deductible
The charitable deduction applies to eligible donations of cash and property. Property donations (or donations “in kind”) are “generally deductible at their fair market value.” Taxpayers who volunteer their time with qualifying charitable organizations can deduct any unreimbursed out-of-pocket expenses as well. This includes expenses such as transportation and postage, provided that they are incurred as a result of and directly in connection with the taxpayer’s volunteer activities.
Charitable IRA Distributions Are Deductible for Taxpayers Age 70 ½ and Older
The IRS allows taxpayers age 70 ½ and older to make qualified charitable distributions directly from their individual retirement accounts (IRAs)—but not from SEP IRAs or SIMPLE IRAs. Similar to other charitable donations, charitable distributions must be made to qualifying exempt organizations in order to be deductible. The maximum annual deductible contribution is $100,000 as of 2022.
Taxpayers Can Claim Their Charitable Deductions on Schedule A
“Most contributions of cash or property made to a charitable organization are deductible as an itemized deduction on Schedule A, Form 1040, Itemized Deductions,” says the IRS. When claiming charitable deductions, taxpayers should ensure that they have substantiating documentation. In the event of an IRS audit, having this documentation on-hand will help avoid any questions as to the legitimacy of taxpayers’ deductions.
Request a Confidential Consultation with Tax Attorney Kevin E. Thorn in Washington D.C.
If you have questions about taking charitable deductions for the 2022 tax year—or if you have concerns about charitable deductions you have taken in the past—we invite you to get in touch. To request a confidential consultation with tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group in Washington D.C., please call 202-349-4033, email email@example.com or inquire online today.