Are silent auction purchases tax deductible?

When donating to a charity, knowing whether your contribution is tax-deductible is important. Only donations to qualified organizations are eligible for tax deductions. Here's how to determine if an organization qualifies and how your deductions might work.

How to Check if an Organization Qualifies

You can verify if an organization can receive tax-deductible donations by asking the organization directly or using the IRS Tax Exempt Organization Search tool. This online tool allows you to search for organizations that meet IRS criteria for deductible contributions.

Types of Qualified Organizations

Generally, only certain types of organizations qualify, including:

• Community organizations include charitable, religious, scientific, and educational organizations.
• War veterans' organizations and their auxiliaries.
• Fraternal societies, but only if your contribution is for charitable purposes.
• Nonprofit cemetery companies provided your donation isn’t for a specific burial plot.
• Government entities like the U.S. government or any state provided your donation is for public purposes.

For example, a donation to a city’s police department for a crime-solving reward qualifies as a public-purpose donation and can be deducted. Similarly, a donation to the Social Security Trust Fund qualifies as it's part of the U.S. government.

Examples of Qualified Organizations

Here are some common examples of organizations where your donations may be deductible:

• Religious organizations, including churches, mosques, synagogues, and temples.
• Nonprofit charities like the American Red Cross.
• Educational organizations, such as schools, museums, or organizations like the Boy Scouts of America.
• Nonprofit hospitals and medical research organizations.
• Volunteer fire companies and public park organizations.

Contributions From Which You Benefit

If you receive a benefit from your donation, such as tickets to an event, you can only deduct the amount that exceeds the fair market value (FMV) of the benefit.

Example: You pay $65 for a church dinner ticket, but the dinner's value is $25. You can deduct $40 from your taxes as a charitable contribution.

Donations and State or Local Tax Credits

If you receive a state or local tax credit in exchange for your donation, your deduction may be reduced by the amount of the credit.

For instance, if you donate $1,000 to a charity and receive a 70% tax credit, your deductible donation would be reduced to $300.

However, you may not need to reduce your deduction if the tax credit you receive is less than 15% of the donation’s value.

Membership Fees and Token Items

If you pay membership fees to a qualified organization, you can only deduct the amount exceeding the value of any benefits you receive, such as free event admission. However, if the benefits are minimal or of token value, the organization may inform you that you can deduct the full payment.

Written Statements for Donations

If you donate more than $75 and receive goods or services in return, the organization must provide you with a written statement. This statement should explain how much of your payment is deductible and estimate the value of the goods or services you received.

For more detailed information on qualified charitable contributions, visit the IRS Publication 526. Understanding these rules allows you to maximize your charitable donations while ensuring you're eligible for tax deductions.