With war, natural disasters, and other tragedies happening worldwide, you may want to donate to the global causes you believe in. But what are the tax implications of giving to charities abroad?
Donating to charity has its own rewards, well above and beyond tax breaks. However, those tax breaks can sweeten the pot, allowing you to give even more. That being said, it’s vital to note that donations to foreign organizations are generally not tax deductible. Limited exceptions involve charities in Canada, Mexico, and Israel, but evaluate carefully before assuming any associated tax breaks.
To help support charitable activities abroad while keeping the door open for tax deductions, consider giving to what the IRS deems ‘qualified organizations.’ These include major U.S. nonprofits with global reach, like the American Red Cross and the United Way. Many religious organizations and domestic nonprofit schools and hospitals also fit that bill. Other 501(c)3 organizations listed in good standing on the IRS Tax Exempt Organization Search (TEOS) tool at IRS.gov may also be tax-advantaged recipients. Giving through donor-advised funds (DAFs) can offer immediate tax advantages even if you’re unsure (yet) where you’d like the funds to be directed.
Before expecting a tax break on your contribution, be sure that you’re giving enough to move the needle on the threshold for standard deductions. In 2024, that standard deduction is $29,200 for married filing jointly and $14,600 for individuals. If you anticipate exceeding that threshold, you should itemize your deductions, which is the only way to receive a charitable deduction. There is no longer a line-item deduction for charitable cash contributions for taxpayers who do not itemize.
Even if you don’t expect a tax break, vetting charities against IRS standards has other benefits: It can help keep you and your finances safer. Some individual organizations or countries are sanctioned or deemed Specially Designated Nationals and Blocked Persons for which donating can legally land you in hot water. Others are scam organizations, unfortunately. The FBI recently issued a warning about such charity scams in which criminals are soliciting donations concerning the Israel-Hamas conflict.
As with all charitable giving, keep in mind that you need a gift receipt that contains the wording necessary to qualify it for a deduction. If it’s a large gift, confirming the language with your tax advisor may be worth your while.
Donating stock or property can present another opportunity for a tax deduction. According to the IRS, you may generally deduct the donation’s fair market value without paying tax on the gain if it has been held for over a year. However, this appreciation in value may require additional adjustments.
So go ahead and support the global causes you believe in. But take a few smart steps to ensure your money is going to legitimate organizations and you’re receiving the tax breaks you hope to receive. Feel free to contact us with questions.
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