Tips on Tax Deductions for Charitable Contributions (I)

One of the benefits of supporting a worthwhile cause is the ability to
take a federal income tax deduction in some cases. To help contributors
to nonprofit organizations understand which of their donations are tax
deductible and which are not, the Council of Better Business Bureaus
offers the following tips:

Tax Exempt vs. Tax Deductible

"Tax exempt" does not necessarily mean "tax deductible." A tax exempt
organization is one that does not have to pay income taxes. Contributions
made to certain tax exempt organizations may be deductible on the donor's
federal income tax return. While the Internal Revenue Service (IRS)
defines more than twenty different categories of tax exempt
organizations, contributions to groups in only a few of these categories
are tax deductible.

You can determine the tax exempt status of an organization either by
contacting the local office of the IRS, or by asking the organization for
a copy of its "Letter of Determination." A "Letter of Determination" is
the formal notification an organization receives from the IRS once its
tax exempt status has been approved. Also, IRS Publication 78, Cumulative
List of Organizations, is an annual listing of thousands of tax-exempt
organizations to which contributions are deductible as charitable
donations as defined in section 170 of the Internal Revenue Code.