ISSF has received an US tax-exempt status 501(c)(3) from the IRS as charity. Donations to charity are tax deductible expenses. These donations can reduce your taxable income and lower your tax bill. Not everyone will be able to deduct their charitable contributions, however. You will need to itemize your tax deductions in order to claim any charity. You claim your tax deduction on Form 1040 (Schedule A PDF).
Your gift of cash or property must meet certain criteria in order to be tax-deductible:
a) You must actually donate cash or property. A pledge or promise to donate is not deductible until you actually pay.
b) You must be able to itemize. Giving to charity is a great tax planning strategy, but it only works for people who are eligible to itemize their deductions.
c) You must meet record keeping requirements. This includes saving canceled checks, acknowledgment letters from the charity, and appraisals for donated property.
Taxpayers are required to keep excellent records of their charitable contributions. Your records must indicate the name of the charitable organization, the date of your contribution, and the amount your contribution. Canceled checks work well as a written record, since the name of the charity, the date of the gift, and the amount of the gift will all be recorded on the check. Bank statements showing a gift paid by debit card and credit card statements showing a gift paid by credit card are also contain these same elements needed for your records.
Upon request, ISSF will provide donors with a written letter acknowledging the gift or with a receipt for the donation. These acknowledgment letters should also be kept with your tax records. If a tax return is audited, the IRS can disallow charitable donations of $250 or more if you don't have the written acknowledgement from the charity that documents your gift. The IRS advises, "If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions" (from Publication 526).
Non-Cash Contributions of Property
Contributions of property (other than cash) are subject to strict record keeping and substantiation rules. You must be able to substantiate the fair market value of the goods or property you donated, plus keep any written acknowledgments you receive from the charity.
Limits on the Charitable Contribution Deduction
Your charitable contribution tax deduction may be limited. There are limits specific to charitable contributions, and there are general limits on itemized deductions. You can deduct:
1. cash contributions in full up to 50% of your adjusted gross income.
2. property contributions in full up to 30% of your adjusted gross income
3. contributions of appreciated capital gains assets in full up to 20% of your adjusted gross income.
Charitable contributions in excess of these limits can be carried over to the following tax year. The excess contributions can be carried over for a maximum of five years.