As a US expat, charitable contributions can be made to reduce your tax liability. American expats living abroad can make a charitable donation to a wide range of US and foreign charities. However, it is essential to follow several IRS rules to make sure that charity donations are tax deductible.
IRS approved charity
In order for the charitable donation to be tax deductible you must ensure the charity you are donating to is tax deductible. US expats can donate to various educational, religious and charitable organisations. However, only charitable contributions to qualified non-profit organizations are tax deductible. This means that donations to foreign charities do not qualify as an itemized deduction on a US expat tax return.
Records of Charitable Donations
One of the most important rules of deducting charitable donations is to keep a good record of all contributions. In the case of donations of over $250, a US expat must keep a bank record, payroll deduction record or a letter from the charity with details of the contributions. For donations over $500, American expats must file a form 8283 and attach it to your US expat tax return.
Deducting Charitable Contributions
US expats must be aware that they can deduct charitable donations in the year that they were made.
In order to deduct charitable donations, US expats must file a Form 1040 and itemize his/her deductions on a Schedule A.
Charitable contribution to a qualified not for profit organization cannot exceed 50% of the Adjusted Gross income. If they make a gift of appreciated property, the total amount of the deduction cannot exceed 30% of the AGI. For donations to colleges and universities deductions of up to 80% of the entire donation can be taken.