What to Know About Write-Offs and Nonprofit Donations

What to Know About Write-Offs and Nonprofit Donations

What to Know About Write-Offs and Nonprofit Donations 1000 667 Ryan Holloway

Nonprofits are the backbone of keeping our community grounded.

Especially with how polarizing 2020 has been, a lot of people feel they want to contribute in some way to the causes they care about. Doing this is not only a great way to give back, but also potentially reduce the amount you’ll owe on your taxes at the end of the year. That’s why we’ve put together a helpful guide on what to know about nonprofit donations. Here’s what you need to know:

They’ve got to be a 501c organization.

While this might seem like a no-brainer, people sometimes ask if they can write-off any GoFundMe donation or give away. Unfortunately, the only donations the IRS recognizes are those to 501c charitable organizations. Granted, that’s not to say those funds aren’t worth it, however, they aren’t exactly deductible from your taxes. Instead, vary up what you give out if you find yourself in a giving mood.

Not every cash transaction with a nonprofit is tax-deductible.

Granted, even if you are dealing with a 501c nonprofit, not every single action with them is considered tax-deductible. For example, despite that they’re both food items, buying a water bottle at a nonprofit-hosted block party is not deductible, but buying a ticket to a charity dinner is. Why is this the case? One is a large enough cash amount that can be applied to an already tax-deductible transaction (buying a meal), while the other is too small. Another popular example is raffle tickets or bingo cards, which are also not deductible.

The safest route to go instead is simply donating to a nonprofit directly or going after a method that gives you a sizable receipt, proving to your accountant something tangible.

Anything involving political campaigns or direct candidate contributions don’t count as write-offs…

Be careful about getting political.

Political organizations can be great to donate to, however, it can get tricky figuring out where to give and still receive a write-off. Anything involving political campaigns or direct candidate contributions don’t count as write-offs, as well as paying for any fundraising events involving a politician. Certain 501c causes are still fair game (such as in sectors like environmentalism or prison reform), however, mostly anything directly involving politics won’t count.

Always grab a receipt.

Although the IRS allows you to estimate up to $300 in cash donations for nonprofits, anything over that and you’ll most likely want a receipt. The cash limit is great for when you drop a bag of clothes off at Goodwill and little acts like that, however, if you’re planning on making a sizable donation to a nonprofit, then taking the extra step to get your paperwork together will save you quite a bit of time in tallying up your total tax liability.

Don’t forget that property counts, too. 

Donating property is a great way to move assets you don’t want anymore while reducing your tax liability. One nice feature about this is it’s often more favorable price-wise than the open market, while also more of a streamlined process than trying to sell it. Property valued at over $300 is worth considering too because even if you don’t have a Monet laying around to donate, paintings worth $500-1000 are well-worth exploring the write-off in themselves. Take a look around at what you might be willing to off, as it can be a great way to also reduce your tax bill as well.

Want an accountant that supports your mission?

Your financial wellbeing is only part of the equation. Stand firm knowing your accountants back your organizations values, goals, and team, too.

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