IRS explains tax rulesfor deducting donations

Published January 6, 2005 12:01 am
This is an archived article that was published on sltrib.com in 2005, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

As private U.S. donations to tsunami relief efforts top $200 million, the IRS is reminding people those donations may be tax deductible depending on when and to whom donations are made.

The IRS allows tax filers to deduct charitable donations from their taxable income for the year the donations are made. To do so, filers must give to a domestic, tax-exempt, charitable organization such as a church or a relief agency and get a receipt.

Specific information about such deductions is available in an IRS publication, Disaster Relief: Providing Assistance Through Charitable Organizations. The publication also is available at http://www.irs.


With the disaster in Southeast Asia dominating headlines, many people are turning to relief organizations such as the American Red Cross, USAID and UNICEF to donate funds. However, many other smaller groups may not have tax-exempt status.

"If you are not familiar with the organization, then I would ask questions to see if [donations] are tax deductible," said Doug Farrell, a tax manager at Jensen Accounting & Tax in Alpine.

He said he hasn't fielded any specific questions on tsunami relief, but because most people have donated this year, questions probably will not come until 2005 tax return preparations are under way.

However, legislation introduced in the U.S. Senate this week may change that.

A bill sponsored by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and top Democratic Sen. Max Baucus, of Montana, would allow tsunami donations made through the end of January to be deducted on 2004 returns.

Aides to both senators predicted quick congressional passage for the measure.

Regardless of when donations are made, filers should keep a copy of the donation receipt, especially with large donations. Receipts usually should be kept for five to seven years, Farrell said. Although people can claim deductions without receipts, Farrell recommends getting receipts and keeping them for any IRS audit.

"It's great to be giving," he said. But "it's great to get some tax benefit, too."


The Associated Press contributed to this story.

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