Filing Your Taxes - Contributions to Foreign Charities

Donating to charity is a fantastic thing to do because it gives those who are less fortunate a chance to have more. But when you make that charitable contribution, you are able to get a deduction on your taxes. Basically, when you contribute something, you are reducing your own assets and the government gives you a little bit of a break for being so kind. This is when you make charitable contributions to domestic charities. What happens when you make contributions to foreign charities and organizations?

The answer is that you cannot deduct a contribution that you make directly to a foreign charitable organization. The charitable donation is not benefiting any entities within the United States. However, there are some exceptions to this rule that you should know if you plan on donating to a foreign charity.

For instance, you are able to deduct any charitable donations that are made to a U.S. organization if that organization transfers those donations to a foreign entity. You can also deduct the contribution if the organization is an extension of a U.S. organization.

Other exceptions

If you are thinking at this point that you cannot deduct your charitable contribution at all, you need to be mindful of where that contribution went. For instance, you can deduct contributions that have been made to certain Canada, Israel, and Mexican organizations. What sets these certain organizations apart from the rest within these countries are their qualifications. If the organizations meet the same qualifications that a U.S. organization meets under U.S. tax law, then you can deduct your contribution. The organization itself can tell you whether or not it qualifies. If the organization is unable to provide you with an answer, you can contact the IRS and they will be more than happy to tell you. This may be a question you want to ask before you make a contribution to the organization, especially if tax deductions are very important to you.

Just keep in mind that you can't deduct more than the percentage limit that is imposed upon Canadian, Israeli, and Mexican source income. If you or a family member is enrolled in a Canadian university or college, there are no deduction limits on the contributions made to the school. This is frequently referred to as the United States-Canada Income Tax Treaty. For instance, an individual living in Canada who gains income from the United States does not have to pay Canadian income tax.

Before you make that contribution

So before you make that contribution, make sure you check to see what you can and cannot deduct on your income taxes. If you are adamant on donating to a specific charity, then deductions may not be an issue. If they are, make sure you do your research before donating to a foreign charity. At least you know that if the organization does not have any United States interest and is not based in Canada, Israel, or Mexico, you can count on not being able to deduct that particular donation.