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Tax season is upon us, which means it's time to talk charitable donations. This time, we're going to address the commonly held misconception that all charitable donations are tax deductible.
Charitable donations must meet specific criteria to be deductible. And even then, there are situations when the entire value may not be subtracted from your returns.
General Rules for Charitable Donations
We'll get to those situations in a second. But first, three general rules apply:
The first rule is particularly important -- the cute kid selling candy may not belong to a properly registered non-profit. Check the IRS database to be sure.
If Your Donation Still Might Qualify, Consider ...
If your donation is still looking deductible at this point, consider the following:
Charitable donations are tax deductible only when you do not receive anything of monetary value in return.
If you attend a fancy charity dinner, you can only deduct the amount that exceeds the cost of the meal. If you win an item from a charity auction, you can only deduct the amount that exceeds the value of the prize.
But if the prize is valued above what you paid, you can't deduct any of your "donation."
And raffle tickets are never tax deductible -- even if you don't win. This applies to all games of chance, including bingo and lottery tickets.
There are a few more rules out there about what you can and cannot deduct. So before you send in your returns this season, make sure your charitable donations are tax deductible. You don't want a visit from the IRS.