Charities & Donations: What’s tax deductible?

Contributions to non-U. S. charities can not be deducted in the U.S. with the exception of certain Canadian, Israeli, and Mexican charitable organizations.     

Donations to the Canadian charities are tax-deductible in the U.S. However, unlike Canadian tax returns which allow for donations to simply be deducted, U.S. tax returns use "itemized" deductions. Not every U.S. taxpayer benefits from itemizing; often "standard" (fixed amount) deductions are more cost-effective. However, if you do not itemize, you cannot deduct charitable donations. Please let us know the amount of your donations and we’ll figure out which type of deductions (itemized or standard) would be more beneficial for you.

If you have receipts for various expenses which are deductible in your country of residence, It is sometimes possible to deduct the same expenses on your U.S. tax return. However, the method for claiming deductions to reduce gross income in the U.S. is different from the method used in most other countries.

The taxpayer has the choice of either claiming a fixed amount (standard deduction) or claiming a separate deduction for each item (itemized deductions).

The Standard Deduction

The standard deduction amount depends on your filing status (from $6,200 through $12,400 for 2014 tax year, annually adjusted for inflation). The choice between the two methods depends on how much you can deduct by itemizing. More than half of all taxpayers actually benefit from claiming the standard deduction because the sum of each of their itemized deductions would not exceed the amount of the standard deduction. Additional benefits of claiming the standard deduction include: not needing to keep records of your contributions, and a lower risk of random audit.

Itemized deductions

Itemized deductions are worthwhile if the taxpayer paid U.S. state income tax or mortgage interest on personal (not rented) property. In these cases the sum of miscellaneous deductions (such as charitable contributions, medical expenses, gambling losses, etc.) and these major deductions is often greater than the amount of the standard deduction.

All expenses related to income generated by rental properties or business activities may not be claimed as personal itemized deductions. Those deductions should be claimed via the appropriate rental or business schedules. Please note that various personal expenses which may be deductible in your country of residence (i.e. commuting expenses, burial expenses, home repair expenses, and licensing fees) may not be claimed as itemized deductions.

We assess the amount you can claim using each method in order to determine which type of deduction will benefit you the most.

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