Adopting a family is a way of giving gifts to a specific family who is in need. While this type of charity giving is often necessary and appreciated during the holiday season, it may not qualify you for a tax deduction. To make a charitable donation by adopting a family, make your donation through an official charitable organization that ha 501(c)(3) status.
Options for Adopting a Family
Direct Donations to Needy Families
Particularly during the holiday season, it is common for local groups to come together to help area families in need. The gift giver adopts a family to give to during that period of time. For example, a church sets up a gift exchange program in which the gift givers choose a family to help and then buy gifts, food or other items to give to the family. In this instance, the cost of those gifts is not a qualified tax deduction. That is because the program allows for the donator to give specifically to an individual or family, rather than to the charity.
Donations Through Charitable Organizations
On the other hand, if you donate money to the established nonprofit organization, this can qualify for a tax deduction. The key is in whom you give the gift to. Tax deductions to individuals do not qualify as charitable contributions according to the IRS's rules. To find a full list of the types of contributions that do qualify, visit the IRS's Charitable Contributions webpage. In order to receive the tax deduction, you must donate to an approved charity, rather than to an individual. Check with any organization to determine if the type of giving that you do will qualify for a tax deduction.
Donating to Adopt a Family Programs
For those who do adopt a family, the real reward in doing so may not be a tax write-off but rather a personal sense of helping. Although this type of donation may not qualify for tax benefits, it can certainly be worthwhile. This is particular true of families in desperate need. In addition, you can encourage these families to seek out charitable organizations for additional help and then donate to those locations. The decision to donate in adopt a family drives is up to the individual.
Tax Breaks for Donations
By contributing to the aid of a charity, tax payers may receive a tax deduction. The IRS outlines the specific guidelines for such donations, but it generally includes the following restrictions.
- Donate to a qualified, 501(c)(3) organization. This nonprofit organization receives this special status directly from the IRS. For a master list of organizations that qualify, use IRS Publication 78, available as a searchable document on the IRS website.
- Itemize your tax deductions in order to apply any charitable donation to your taxes. If the standard deduction amount is more than your itemized deductions, you may not able to list the charity donation directly.
- Have a receipt for any donation over $250 in value, from the charity.
- Document the donation on your Form 1040 when filing your income documents. Noncash charitable contributions require the use of Form 8293.
- Avoid exaggerating the value of donations. The IRS may ask for documentation of value of the donations, not just a receipt that you donated.
Discuss your ability to claim charity donations with your tax preparer if you are unsure about the qualification. In most cases, you can ask the charity for a receipt for your donation at the time of giving, but your tax professional can help you to determine whether to include it on your taxes or not.
Are You Ready to Adopt a Family?
You can find adopt a family programs through various groups including local community groups, churches and local government programs. Check with family services government locations for more information. These programs often run during the holiday season, but may be available throughout the year.
For tax deductible charities, find 501(c)3 organizations in your local area or look for national companies including the Red Cross, Salvation Army and the United Way. Request the nonprofit designation of any charity before donating if you wish to donate for tax purposes.