Donating to a nonprofit is tax-deductible.
That means your donation can be taxed at a lower rate than if you donate directly to a charity, whether you’re a charity or a company.
For instance, if you donated $1,000 to a local charity and then gave $2,000 directly to that charity, your donation would be taxed as $1.20.
Donations to the American Cancer Society, the American Red Cross, and the American Diabetes Association are also deductible.
Donating directly to charity is generally more tax-efficient than giving directly to charities.
This means that you might be able to save even more money on your taxes if you’re donating directly to one of these organizations.
If you donate to an organization, you’re supposed to make a deduction for all of your charitable contributions.
For the purposes of the deduction, the IRS will deduct the cost of the items and services you purchase and you’re not allowed to deduct the costs of any goods or services you provide.
For example, a $1 donation to the National Endowment for the Arts is not deductible, and you are not allowed a charitable deduction for your entertainment expenses, which you may purchase from an entertainment-related business or a nonprofit.
Your charity can deduct the donation you’re making from its books.
However, the organization may also deduct any amounts you contribute directly to the organization’s overhead.
For a tax deduction to be effective, it must be made on your behalf, and it must not exceed the tax-exempt amount you contributed.
The IRS generally requires that you submit a completed Form 1040NR or 1040EZ for each charitable contribution.
You can also make a separate return for each item and service that you contribute.
However to get the maximum charitable deduction, you must make at least two of the following three separate charitable contributions: a donation to a non-profit or charity; or a donation that is used to purchase goods or a service for which you don’t qualify for the tax deductibility exemption.
For more information on the tax deductions and charitable contributions, see IRS Publication 515.
If your organization qualifies for a tax exemption, it can deduct any portion of the charitable contribution for the charity.
Don’t make more than one charitable contribution to the same charity, even if you use the same mailing address.
For details on the charitable deduction rules, see Pub.
515, Donating and Donating for Personal Use.