When you give to a charitable organization, you want to make sure your contribution will make a difference. But it's also important to ensure that, come tax time, you'll be able to deduct the donation on your taxes. With a recent bulletin, IRS Tax Tip 2021-158, the IRS announces the debut of a search tool that will help you identify the best charities for your annual giving.
Deducting Charitable Contributions
At tax time, you can deduct qualifying charitable contributions, which will reduce the amount of your annual income that's taxed. However, you can only deduct those charitable donations if you itemize. Often, the standard deductible may exceed your itemizations, in which case, all that work you did to track your contributions will be tossed out.
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In order to claim a contribution, financial or otherwise, to a nonprofit organization, you must meet the IRS's qualifications. You'll need a record of the contribution, either in the form of a bank record or a written confirmation of the donation by the organization itself. The organization's federal tax status must also be up to date, which is something the nonprofit likely won't communicate to you when you make the donation.
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Tax Exempt Organization Search Tool
To get to the Tax Exempt Organization Search Tool, go to the Tax Exempt Organization Search page and search by organization name or Employer Identification Number. You can find information on whether an organization has had its tax-exempt status revoked by researching the organization name or EIN.
If you're open to donating to a variety of nonprofits in your area, you can approach your research that way instead. The search tool lets you pull a list of eligible organizations in a specific city. To do this research, leave all the other fields blank and simply input your city name and state in the search boxes, then click Search.
Tax-Exempt Bulk Downloads
Taxpayers interested in finding local legitimate charities might be better off using the IRS's bulk download tool. With this tool, you can pull a list with all organizations by the following criteria:
- Publication 78: A list of all organizations eligible to receive tax-deductible contributions
- Automatic revocation of exemption: A list of organizations whose federal tax exemption was revoked due to failure to file a Form 990-series annual return
- Form 990-N: A list of all Form 990-N filings
- Form 990 Series: A list of the most recent Form 990 Series filings on record
Tracking Down Charitable Organizations
One issue with the search tool is that unless you have the organization's EIN, you might have a tougher time finding it. The search tool only uses the business name that is registered with the IRS. That means if the legal name of an organization and the "doing business as" name (DBA) are different, it might not show up initially.
One great tool for gathering information on a charity is CharityCheck101. Here, you can input the name of an organization, or as much as you know of it, and find it in a list of similarly named organizations across the country or just in your area. When you find it on the list, simply click and you should see the EIN and the latest information reported to the IRS on that organization.
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Charitable contributions can help reduce your taxable income each year, saving you money at tax time. But the IRS has strict requirements when it comes to deducting your contributions to nonprofits, and one is that the charity must still have tax-exempt status with the IRS. The search tool can help you determine if an organization qualifies before you donate, but you might have to track down the DBA name or EIN if you're having trouble finding it.