Taxes You Need to Know as a Volunteer or Donor

If you give time, money, or resources to a church or charity, the tax side of things can feel confusing. The good news is that the tax code actually rewards many of these actions. Below you’ll find the most useful tips that help you keep more of what you earn while supporting the causes you love.

What Tax Deductions Are Available?

First, any money you give to a registered nonprofit can be claimed as a charitable donation. That means you can write off the amount on your tax return, reducing your taxable income. Most churches, schools, and NGOs qualify, so check that the organization has a proper tax‑exempt status before you donate.

Donations of goods work the same way. If you give a used laptop or a box of clothes, you can claim the fair market value of the items. Keep receipts or a written acknowledgment from the charity – the IRS asks for it if you want to claim the deduction.

Volunteers can also get tax breaks, but they’re different from cash donations. You can’t write off the hours you work, but you can deduct out‑of‑pocket expenses like travel, meals, or supplies. The key is to track every receipt and note the purpose of the expense. A simple spreadsheet works fine – just record the date, amount, and why you spent it.

Filing Tips for Nonprofits and Churches

Nonprofits themselves aren’t immune to tax rules. They must file annual information returns (Form 990) to stay in good standing. Even small churches that don’t have a lot of money need to keep accurate records of donations, expenses, and any unrelated business income.

If a church runs a thrift store, for example, the profits from sales could be considered unrelated business income and may be taxable. The safest move is to talk to a tax professional who knows nonprofit law. They can help you set up proper accounting and avoid surprise taxes.

For donors, don’t forget the charity’s IRS identification number. It appears on the receipt and is needed when you fill out Schedule A on your return. If you donate by check, write the check in the name of the organization, not a specific program – it makes the paperwork easier.

Finally, remember that tax benefits are a bonus, not the main reason to give. Giving time or money should feel right first. The tax break simply makes it a bit easier on your wallet.

Got more questions? Talk to your accountant, check the IRS website, or ask the charity’s finance team. Knowing the basics lets you focus on what matters – making a difference in your community.

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