Based on numerous reports around three out of four Americans donate to charity on a regular basis. These donations if made to the appropriate organizations, tax-exempt organization by section 501(c)(3) of the Internal revenue code, then, you can deduct in your itemized deductions. You can use the IRS tool for Tax Exempt Organization Search
Note that some centimillionaires and billionaires have subscribed diverse pledges, like The Giving Pledge founded by Bill Gates and Warren Buffett. Note that a pledge is not considered a donation (it is only a promise and not legally biding) as there is no exchange of money (no constructive receipt), so no deduction until it happens. However, more and more wealthy individuals are contributing to donor-advised funds where the funds are transferred to the 503(c) fund but even if not owned, there is certain control on distribution of funds and investment strategies. The donor-advised funds have been under scrutiny by the IRS and other organizations as abusive. In some cases, wealthy individuals are creating their own foundations where CEO, Board, management and staff can be family and friends taking a tax deduction for funds still relatively available or subject to their decisions.
For the majority of the donors, it is just a matter of selecting the non for profit organization that you want to support with your money or in-kind donation.
- Cash donation – you can claim the charitable contribution in your itemized deductions
- In-kind donations – if the donation is over $500, then, you have to file Forms 8283 and you might need an appraiser and the donee acknowledgement (the donee accepts the in-kind donation but there is not responsibility on the appraisal that the donor requested) and it will be deducted in your itemized deductions
It is important to realize that the donation might be or not be tax deductible as it is counted versus your itemized deduction but if the standard deduction is higher, then, the taxpayer will benefit from the higher of the two.
If you are making donations, keep in mind that you might get a tax benefit in additional supporting your non for profit mission. You could be the next Chuck Feeney, the co-founder of Duty Free Shoppers Group, who died less than a year ago and donated $8 billion during his life living in a relatively small apartment in his final days.