 Income tax 2021-2022. Gifts to charity part number one. Get ready to get refunds to the max. Diving into income tax 2021-2022. Most of this information can be found on schedule A tax year 2021 on the IRS website at irs.gov, irs.gov. We're looking at the income tax formula itemized deductions keeping them distinct in our mind from the adjustments to income otherwise known as the above the line deductions, the schedule one deductions, deductions for adjusted gross income. Also noting that itemized deductions need to be greater than the standard deduction in order to have them be beneficial to take. We're on page one of the form 1040 looking at line 12A standard deduction or itemized deduction here and this is going to be the schedule A for the itemized deductions. The categories on the left hand side if the sum of the itemized deductions are greater than the standard deductions on the schedule A it will be pulled forward to 12A on the form 1040 and taking them as opposed to the standard deduction. Also note that we're looking at itemized deductions for schedule A which are going to be the main spot you think of when you're talking about charitable contributions. However, they also added this item that you can take on 12B charitable contributions if you take the standard deduction. However, that is far more limited. So you typically can deduct more if you're able to itemize in terms of the charitable contributions but we got to keep those straight in our mind saying that charitable contributions generally we think of them as an itemized type of deduction which we would only be able to take advantage of to a larger extent if we were itemizing. However, if someone is not itemizing we have this item on page one of the form 1040 the charitable contributions if you take the standard deduction that we're focused here on the itemized areas noting that you want to keep in mind what the standard deduction is to determine whether or not someone is going to be able to itemize. Getting to the gifts to the charity on schedule A now we're talking about the itemized deductions. You can deduct contributions or gifts you give to organizations that are religious, charitable, educational, scientific, or literary in purpose. You can also deduct what you give to organizations that work to prevent cruelty to children or animals. So typically the organization would have to be set up as some kind of not-for-profit organization they will typically be very vocal about that and tell you that if you are giving to them. Certain willing captains may be able to deduct expenses paid in 2021 for native Alaskan substance foul will will hunting activities. That's obviously a very specific area if it applies to you can take a look at publication 526 for more detail there. If you itemize your deductions don't claim a deduction for a gift to a charity on form 1040 or form 1040 SR line 12B claim the deduction on schedule A. So in other words if you are itemizing then you want to take your charitable contributions on the schedule A if you are not itemizing you might still have a limited amount of charitable contributions that you can take on page one of the form 1040 while still taking the standard deduction. Gifts to charity to verify an organization's charitable status you can and note that when you give to charity you can't just say well I know this gift came from my heart so I should be able to deduct it meaning you can't deduct things that could be well-deserved you know gifts that could go a long way to basically people that you know are in need for example in giving personal assistance or something like that because they're not going to charitable organizations and for one reason of course on that is that the government needs to be able to verify and track this information in order to take the deduction so it has to go to a qualified organization the qualified organization to some extent having their own requirements to track donations and gifts and whatnot with them so check with the organization to which you made the donation and the organization should be able to provide you with verification of its charitable status so you should be able obviously to talk to the organization they're typically very vocal about their charitable status use our online search tool at irs.gov to see an organization is eligible to receive tax deductible contributions so you can look at their website and check them out there also just realize if an organization is pressuring you to give them money then of course you would most likely want to look this stuff up before you give them money not just to see that you can get the deduction but just to see that it's an honest place that's asking for money so that the money that you give is actually going somewhere good in order to do that and also just realize that the fact that they do qualify as a charitable organization does not mean that they're ran efficiently so notice that the problem with charitable organizations and government entities for example is there is no market pressure you don't have people looking at them and saying basically the shareholders the owners of the company aren't looking at them saying you need to be efficient you need to run well because shareholders are looking for a profit that's pressure to make the company work well when you're looking at a charitable organization or a government entity it's not the same kind of dynamic because we're not expecting a direct return if I give to a charitable organization I'm not looking over their shoulder saying you better be efficient because I want to get a return on the money I gave you so that means it's a lot more difficult for them it's a lot easier in other words for them to be less efficient meaning they're bloated they're spending a lot of money on stuff that's not getting the money to where they need to go and so on and so forth because they don't have any competition or pressure like that so what you would like to do is look up the organizations that are efficient a little bit more put your money in them so that your money's going where it's going to go and we all kind of see this that's why government entities often get bloated because it's not that they're bad in and of themselves but you can see how you just don't have the same market pressure and therefore things can get bloated same kind of thing can happen with charitable organizations okay, examples of qualified charitable organizations the following list gives some examples of qualified organizations you can see publication 526 for more examples churches, mosques, synagogues, temples and other religious organizations qualify boy scouts boys and girls clubs of America care, girl scouts, goodwill industries, Red Cross, Salvation Army and United Way fraternal organizations if the gifts will be used for the purpose listed under gifts to charity so you might be some qualifications with the fraternal organizations some more examples, veterans and certain cultural groups non-profit hospitals and medical research organizations most non-profit educational organizations such as colleges but only if the contribution isn't a substitute for tuition or other enrollment fees so you can imagine how people try to kind of double dip on they try to actually act like it's a charitable contribution and then get a deduction for it while they're still getting something from it so obviously if you were to recategorize your contribution and get enrollment compensation for it meaning courses that you get to basically take then you shouldn't get the deduction because you clearly paid for that compensation and so on, you can see this kind of thing again happen as well when people donate money that they kind of still have control over in some way or they try to create a trust for it and stuff like that and if you say if it's a donation you shouldn't have control over it anymore or anything like that they shouldn't be telling them what to do with it so specifically in terms of you should have a general thing that it should be going towards so in any case federal, state and local governments if the gifts are solely for public purposes