What Is a Charitable Donation Tax Break Credit?

Your accountant may recommend that it’s better to donate part of your earnings to a meaningful cause and receive a tax break credit than to incur a higher tax bill. Contributing a portion of your earnings to a charitable organization provides a deduction that could lower your tax liability, but sometimes people have a difficult time finding a cause that’s meaningful enough for them. Starting a non-profit organization, however, allows you to claim an expense while also ensuring that it’s going towards a worthy purpose.

Qualified Non-Profit Organizations

A non-profit organization is similar to other corporations and can be formed by submitting the proper state filings. The benefits of starting a non-profit are the ability to deduct up to 50% of your adjusted gross income and also determine a cause that’s important to you. To take advantage of a charitable donations expense, however, a non-profit must be certified by the Internal Revenue Service as a qualified organization under code 501(c). To apply for this status, you must first obtain an employer identification number, also known as an EIN or tax ID, so that it can be used on the IRS forms. We’ve provided an application for a tax ID number example, so that you can review what type of information needs to be submitted to apply to certify as a qualified organization.

Donation contributions that can be deducted:

  • Fair market value of any property such as land or buildings
  • Amount of a used car that the organization sold through an auction
  • Value of clothes and furniture in good condition, provided there’s a receipt
  • Gas and mileage when using your personal vehicle for the benefit of the charity
  • Overnight travel expenses, such as lodging, incurred while performing volunteer work
  • Cash gifts backed-up by a receipt, canceled check or credit card statement

Keeping It Simple

Gov Doc Filing simplifies the process of setting up a non-profit organization. Filling out an EIN number application is the first step towards certifying your worthy cause. Ourstep-by-stepand easy-to-understand application form helps ensure it will be a smooth certification process.

CHECK ORDER STATUS
Skip to toolbar