Tax Breaks
You may have heard about the tax breaks associated with donations to non-profit organizations. Perhaps you've already experienced a tax rebate based on a charitable donation you've made? Or maybe you run a small business and are interested in providing a local charity with regular donations? If this is the case, it is worthwhile studying up on whether you are entitled to tax breaks by supporting a local charity and how you can assist your charity in gaining the maximum amount of each dollar you donate.
In most countries, the donations you make to local charities and foundations are not subject to tax. This is a basic principle which governs donations to non-profit organizations. All charities in the U.S with incomes over $5000 each year are registered with the Inland Revenue which awards them a special tax code. This code is tagged to all donations the charity receives and makes it exempt from paying tax. If your charity earns less than $5000, it is not required to declare itself to Inland Revenue.
You can find out if your charity has an Inland Revenue code by checking your tax statement at the end of the year. If your donation is listed with the tax code 501 c (e) beside it, it has not been taxed. However, even if an organization has tax exempt status in the U.S., it doesn't mean the same applies abroad. If you make contributions to a charity abroad, you may find yourself paying tax on them. There are also other levels of tax you will have to pay on charitable donations depending on the status of your charity. If you are a regular donor, you should check with your charity to find out how your taxation will be affected.
Another way of checking your charity's taxation status is by accessing a copy of its annual report. This is usually available from your charity's website or through the National Centre for Charitable Statistics. You should be able to find in the report information on your charity's taxation status along with a breakdown of how each dollar you donate is spent.
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