Feel free to donate to Japanese Earthquake Relief efforts, AND...

...make sure that your donation goes to an eligible charity if you want a tax deduction for the contribution.

Hi Folks,

There are only 28 days left to file your 2010 tax returns and we still have some capacity!  We appreciate your confidence, your business and your continued referrals.

We are all seeing the devastation in Japan; its all over the news and the internet.  I'm sure that you feel compelled to reach out and offer some assistance.  We thought it would be a good time to give you some information about the tax deduction that results from your charitable nature.  We thought it would be a good time to give you some information about the tax deduction that results from your charitable nature.

For a charitable contribution to be tax deductibe in the U.S., the recipient of your donation must be a charitable, etc., organization created or organized in or under the laws of the U.S., any state, the District of Columbia, or any possession of the U.S., except as otherwise provided by treaty [ IRC Sec. 170(c)(2)(A) ].  Therefore, contributions to foreign organizations generally are not tax deductible.

In one case, the taxpayer couldn't deduct funds she wired to her cousin in a foreign country for transfer to local Catholic churches that had been damaged in a guerilla war from which taxpayer fled to the U.S. Taxpayer's argument that the local churches were arms of the Roman Catholic Church, a universal organization, and as such were qualified donees, was rejected [ Anonymous , TC Memo 2010-87 (2010) ]. Likewise, no deduction is allowed for contributions to an individual or earmarked for a specific individual, even if made through a qualified organization.

To make sure your generosity is rewarded with a tax deduction from Uncle Sam, consider making your contribution to an orgaization like the Red Cross, your local church or to an otherwise properly organized charitable entity.  Here is some additional general info about charitable deductions from IRS Publication 526 and a link to that Pub.

http://www.irs.gov/publications/p526/ar02.html#en_US_2010_publink1000229643

Generally, only the five following types of organizations can be qualified organizations.

1. A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must be organized and operated only for one or more of the following purposes.
   
   1. Religious.
   2. Charitable.
   3. Educational.
   4. Scientific.
   5. Literary.
   6. The prevention of cruelty to children or animals.
   Certain organizations that foster national or international amateur sports competition also qualify.
2. War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions.
3. Domestic fraternal societies, orders, and associations operating under the lodge system.
   Note. Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.
4. Certain nonprofit cemetery companies or corporations.
   Note. Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt.
5. The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions.
   Note. To be deductible, your contribution to this type of organization must be made solely for public purposes.