“O” is for organizations. There are many kinds of organizations, but they can be handled in very different ways for tax purposes. Charitable organizations are tax-exempt and contributions to those organizations are deductible for taxpayers. How can you tell if an organization qualifies as tax exempt? Everyone knows the United Way is a qualified charitable organization, but what about the Wayzata Orchestra Boosters? Many booster clubs are set up as charitable organizations, but others are not. It turns out the Wayzata Orchestra Boosters is a qualified public charity, meaning contributions to that organization are deductible. So where can you look that up?
That link is the Internal Revenue Service site where you can search by name and state for a charitable organization. Before you make any large charitable contributions, it might be worth checking them out to make sure they are legitimate charities.
It is especially important to check the tax-exempt status of political organizations. Some are organized for the benefit of candidates and a contribution to those organizations is not tax-deductible. Others may seem political but they are organized and run as a charitable organization on behalf of a specific issue instead of a specific candidate or party. Some of those organizations could be receiving tax deductible contributions. The best thing to do is go the IRS site and check them out. Better safe than sorry when donating to organizations.
Taxes A to Z – still randomly meandering through tax topics, but at least for 26 posts in an alphabetical order.