In case you are unsure of what qualifies your donation to a charitable society to be tax-deductible, you have to know the meaning of “tax exempt organization”. An organization that is tax exempt means it has been exempted from paying income taxes on their profits. These are listed under Section 170(c) of the Inland Revenue Code.
There are categories of qualified charitable organizations under section 170(c) of the Internal Revenue Code. These are:
• A state or United States possession (or political subdivision thereof), or the United States or the District of Columbia (if your donation is made exclusively for public purposes)
• A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the US, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals
• A church, synagogue, or other religious organization
• A war veterans' organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions
• A nonprofit volunteer fire company
• A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services)
• A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes
• A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt
The section in the Inland Revenue Code that governs these tax exempt societies is 501(c). These organizations receive most of their financial support from the public rather than from a small group of individuals (such as shareholders). They also use most of their donated money to further their exempt-organization goals instead of investing their money to make more profit.
In Section 501(c) itself, there are differences insofar as tax-deductibility is concerned. Donations to 501(c)(4) tax-exempt groups are not deductible by the donors. But if you give a gift to an IRS-approved 501(c)(3) organization, you can deduct that gift on your taxes.
To deduct a charitable donation, you must file Form 1040 and itemize your deductions under Schedule A. If your total deduction for all non-cash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return. If your contribution is more than $5,000 (which usually includes property or other non-cash assets), you must also complete Section B of Form 8283. This generally requires an appraisal by a qualified appraiser.