Tax Benefits - Frequently Asked Questions

1. What does it mean to be a 501(c)(3) organization?
2. What is my tax benefit for charitable contributions?
3. What counts as a charitable organization?
4. How can I take a deduction for my donation?
5. Do I need a receipt for donations I make?
6. Do I need any acknowledgement for donations under $250?
7. For donations over $250, what information does the receipt need?
8. Can I receive a tax deduction for a donation to an overseas nonprofit organization?
9. Can I take a deduction for volunteering my time and services?

1. What does it mean to be a 501(c)(3) organization?
   For charities, this means that they can accept contributions and offer donors a tax deduction for their gifts. For donors like you, this means your contributions are fully tax-deductible to the amount allowed by law. The email receipt you receive from Friends of Aravind does indeed meet all the IRS requirements as a record of donation.
2. What is my tax benefit for charitable contributions?
   The chart below gives the deduction for a single person in each tax bracket making a cash donation of $100. The instructions for the 1040 Form will help determine the exact amount of your deduction, which will vary depending on your tax bracket and whether you file as a single person or jointly. Tax Bracket Donation Amount Benefit Out-of-Pocket Cost.
   
   

   10%	$100	$10	$90
   15%	$100	$15	$85
   25%	$100	$25	$75
   28%	$100	$28	$72
   33%	$100	$33	$67
   35%	$100	$35	$65

   
   
3. What counts as a charitable organization?
   A charitable organization is generally defined as any nonprofit organization that is incorporated and identified by the IRS as a 501(c)(3) organization. These organizations have been given tax-exempt status and can accept contributions. Friends of Aravind is a registered 501(c)(3) organization.
   Note: Not all donations to nonprofits can be claimed as charitable deductions, even if the organization is registered as a nonprofit. Check with the IRS on whether or not an organization can receive charitable deductions.
   Charitable Events: For a charitable event, only a portion of the ticket value is deductible. The charity hosting the event will be able to identify the exact value of the benefits for each event.
   
4. How can I take a deduction for my donation?
   To claim a deduction, you will need to fill out a 1040 Form, which is available through the IRS website, and itemize your deductions on Schedule A. If you fill out the short form or take standard deductions, you cannot claim your contributions.
   
5. Do I need a receipt for donations I make?
   The IRS doesn't require receipts for cash donations under $250, but you should keep donation information on file. Cash contributions of $250 and over require an acknowledgement that must be sent to the IRS with your tax returns. Every time you make a donation through Friends of Aravind, that donation is recorded in your Giving History by the year, a feature that makes itemizing your taxes simple and convenient.
   
6. Do I need any acknowledgement for donations under $250?
   Though the IRS doesn’t require receipts for donations under $250, it is a good idea to keep this information on file. Be sure to keep the canceled check, credit card statement, or email receipt from the organization to which you donate. Always note the donation amount, the date of the contribution, and the name of the charity.
   
7. For donations over $250, what information does the receipt need?
   The receipt needs to record the donation amount, the date the donation was made, and the name of the charity, as well as a written acknowledgement from the organization of the receipt of the funds. The IRS should acknowledge an email receipt as an acceptable record of donation, but to be certain, always consult your tax advisor.
   When you donate on Friends of Aravind, your email acknowledgement will provide the amount, transaction date, and the charity name, all things the IRS wants you to keep a record of when you donate.
   
8. Can I receive a tax deduction for a donation to an overseas nonprofit organization?
   If you want to take a deduction for your donation, be sure to donate to a charity registered in the United States. That doesn't mean you can't give to an organization that has an international scope, such as CARE or Save the Children. You just have to make sure the charity is registered in the U.S. – as both of these charities are – if you want to take the deduction.
   
9. Can I take a deduction for volunteering my time and services?
   You cannot deduct the value of time or services to a charitable organization, but you can deduct any hard costs associated with that volunteering, such as the gas or bus fare it costs to get there. For example, if you volunteer in a charitable hospital and have to wear a uniform, you can deduct the cost of buying and cleaning the uniform. The IRS will let you deduct any out-of-pocket expenses you acquire in the course of volunteering.

Disclaimer: Friends of Aravind does not warrant or guarantee the accuracy, quality, completeness, or validity of any information it provides. All information has been obtained from sources believed by Friends of Aravind to be accurate and reliable. Please consult your tax advisor for specific tax advice.