501(c)(3) are donation receipts for non-profit charitable organizations. These receipts are provided to people who donate gifts to the organization of value $250 and above.
Through this receipt, the donor can claim a deduction from their yearly income while filing taxes. While the receipt itself does not need to be submitted while filing taxes, it is required later in the case of a tax audit.
What is a 501c3 Organisation?
A 501c3 organization is any association or trust that is exempted from paying income tax. It is named so because the exemption from income tax is stated in Section 501(c)(3), Title 26 of the United States Code.
To comply with the 501(c)(3) section, the organization must have a predefined purpose, which can be any one of the following:
- Prevention of cruelty to women, children, or animals.
- Encourage National or International amateur sports competition.
- Testing of public safety.
- Any religious, scientific, literary, or educational purpose.
- Agricultural Research Organization
Internal Revenue Services (IRS) allow donors to claim tax deductions for donations made to 501(c)(3) organizations. For claiming these deductions, the contribution must satisfy the rules and guidelines set by the IRS.
For instance, even though an organization for testing of public safety is a 501(c)(3) organization, donors cannot claim tax deductions for its donations.
Due to the benefit of tax deduction, an organization needs to maintain its 501(c)(3) status. The loss of this status can lead to a significant decline in the donations received by the organization due to the unavailability of tax deductions to the individual.
501c3 Donation Receipt Rules and Requirements
There are many regulations to be followed for claiming a tax deduction under Section 501(c)(3). An important rule is that you need a 501(c)(3) donation receipt for any donation of $250 and above.
Some of the requirements for the 501(c)(3) donation receipts are:
Current Organization Status
The organization must have a 501(c)(3) status during the time of donation. You can check this status by the IRS search tool for tax-exempt charities.
Content of Acknowledgement
The acknowledgment of donation (donation receipt) must include the amount of cash donated. In the case of the donation of goods and services, it should describe the goods and services and a good faith estimate of its monetary value.
No Goods or Service to the Donor
While donating, the donor must not receive any good or service from the organization in return for the donation. For example, the fee for charity dinners is not eligible for a tax deduction as the donor is receiving the food in return.
Description of Donation
In case the amount of donation exceeds $500, it is mandated to describe the purpose of the donation in detail.
Date of Receipt
For claiming the tax deduction based on a 501(c)(3) donation receipt, the receipt date should fall before the due date of filing taxes for that year or the actual date of filing taxes, whichever is earlier.
How to Write a 501c3 Donation Receipt?
Creating a 501(c)(3) donation receipt is a straightforward process. Follow the guidelines below for the same:
Step 1: Download the appropriate template
To create the proper 501(c)(3) donation receipt, you need to use a template that follows the IRS requirements. Fortunately, CocoDoc provides this donation receipt template for free. You can download the template from this page in any format of your choosing.
Step 2: Date
Entering the correct date of issue of receipt is essential for claiming the tax deduction on the donation. The date must fall in the tax year for which the donor is claiming the deduction.
Step 3: Information About the Charity
Enter the information about the charity to which the donor is donating. This information includes the name of the charity, the mailing address, and the EIN. You can find the EIN through the IRS EIN Lookup.
Step 4: Donor and Donation Information
Provide the full legal name of the donor. After that, provide the address on which the donor can receive correspondence.
The details of the donation start with the monetary amount of the donation. If donating goods and services, they must be described in the section about donation description.
In case of donation of material goods, provide the manufacturer number or the model as well.
Step 5: Signature
Since you require the receipt for claiming a tax deduction, it must be verifiable. For this purpose, it requires the signature of an authorized representative of the organization.
The signature should be followed by the name and title of the representative and the date of signing the receipt.
Conclusion
Donating to a charity is always a good deed. The IRS tax deduction provisions for donations is meant to encourage more and more people to donate for such a good cause.
However, to claim donation to a 501c3 charity, it is important that your 501c3 donation receipt satisfies the criteria and requirements set by the IRS.
With a donation receipt template for 501c3 charities, you no longer have to hire a professional to create the receipt itself. Download the template from this page for free!
