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Tags: finance, taxes, non deductible charitable contributions
 Helping needy people is one way of feeding the soul. So if you want to make charitable works, you often donate to charities. This kind of activity is not only helping others but it can also do great wonders in terms of tax benefit. For majority of taxpayers, there is a general notion that all contributions to charity are classified as deductible in the preparation of income tax return.
Maybe even you I suppose have this kind of perception too. But you must be aware that not all payments to charities are considered deductible. There are also exceptions and they are considered as non deductible charitable contributions. I know that as much as possible, all of us want to exhaust all possible deductions.
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Who wouldn’t want to have a lower tax liability? That’s why; all taxpayers want to utilize all deductible items in their return. But you must be aware of all exceptions too. Actually, you must only remember one thing when it comes to charitable contributions that cannot be deducted. If the payment to charities has redounded to your benefit, then it cannot pass as deductible at all.
Personal benefits are the term that you must always bear into your mind. If you have benefited from the money you have donated to such charities, then you cannot declare it as deductions in your income tax return. I will give you a brief list of charitable contributions which are not deductible items.
First are the contributions to non-qualified organizations. The Internal Service Revenues have a list of qualified charitable organizations where your contributions can be considered as deducible items. If you happen to donate money to organizations which do not fall under the list, well just think about it as a help.
You cannot bring back the money anymore. That’s why as much as possible you have to know what organizations are legitimate. If you want to have tax benefit, you must donate to qualified organizations only. Other charitable contributions you cannot deduct are the contribution to individual persons. Examples of these kinds of contributions are those donations made to a particular family with the intention of giving relief.
Furthermore is when you give financial assistance or donation for the purposes like burial and medical help. The money you donated cannot be deducted as charitable contributions. You cannot deduct it for they are classified as personal expenses. They are not charitable contribution in the strictest sense. So you better watch out for it.
Giving help to other people should come from the heart and you should not think about the tax benefit. But just in case you have donated to charitable organizations, you must know its tax implication. As a taxpayer, you must be familiar with the deductions as well as non deductible items in your tax return.
If for an instance you have included non deductible charitable contributions in your return, you might be subjected for penalties and interest. So, better be aware of these things especially if you alone are doing the preparation and filing of your own return.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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