Charity donations. Are donations to help organisations eligible for tax relief? Is there a tax deduction for gifts? Are donations from a company deductible?
Donations to charity in the USA
In the US you can deduct your contributions only if you make them to a qualified organization. Most organizations (except churches and governments), must apply to the IRS to become a qualified organization. Most non-profit charitable organizations such as the American Red Cross will be considered qualified. Other examples are:
- Most non-profit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums
- Non-profit hospitals and medical research organizations
- Non-profit volunteer fire companies
- Non-profit organizations that develop and maintain public parks and recreation facilities
- Civil defence organizations
The IRS has a limit you can only deduct up to 50% of your adjusted gross income (AGI) (Line 36 on IRS Form 1040) based on the tax year the donation was contributed.
What can I or my business deduct in the USA as Charity Contributions?
- Cash contributions
- Gifts of property or equipment (in-kind contributions)
- Mileage and other travel expenses incurred when working for a charitable organization
Note: You are not allowed to deduct your time working for a charitable organization (including serving on a corporate board)
Deduction for gifts or contributions to help organisations in the rest of the world
When companies donate money to charities they are able to gain tax relief. This tax relief works differently compared to individuals and self-employed sole traders. Donations an individual gives to a charity or the community amateur sports club (CASCs) are tax-free in the UK. How this works depends on whether you donate:
- Gift Aid
- From wages or pension through a Payroll Giving scheme
- Land, property or Stocks
- From your Will
This also applies to sole traders and partnerships.
Charity donations not deductible in Sweden
If you have a business and want to donate money, e.g. 20000 Kr to a help organisation (Red Cross, Salvation Army, Save the Children etc.) you can’t deduct it. For some strange reason, the Swedish Tax Authorities does not accept deductions from company taxes when they contribute money to any help- or support organisation. Slightly odd for a country proclaiming itself to be THE supremacy in humanitarian aid.