As a general rule, you may only deduct donations to U.S. charitable organizations, not foreign charities. However, like with many IRS rules, there are exceptions.
- Donations to Canadian Charitable Organizations. Donations to some Canadian charities may be deductible under an income tax treaty. To qualify for this deduction, you must have income from Canadian sources. For specifics on this type of charitable contribution deduction, see IRS Publication 597 or call the Taxation Solutions, Inc. team for guidance.
- Donations to Israeli Charitable Organizations. Due to an income tax treaty, you may deduct donations made to Israeli charities, provided that the contributions would have been deductible if the charity were organized under U.S. law. However, to deduct these kinds of donations, you must have income from Israeli sources. Your deduction is limited to 25% of your adjusted gross income (AGI) from Israeli sources.
- Donations to Mexican Charitable Organizations. Donations to some Mexican charities may be deductible under an income tax treaty. To qualify for this deduction, you must have income from Mexican sources. Your charitable contribution deduction is limited in relationship to your AGI; this limitation is figured using your income from Mexican sources.
Determining whether your contributions to Canadian, Israeli, or Mexican charities are tax deductible can be confusing, so if you’re not sure about what or how much can be deducted, don’t hesitate to contact our team. We’ll help make sure you’re accurately deducting your charitable contributions to help you avoid tax problems!