Approximately 21 out of every 10,000 people in America were homeless in 2011, according to the National Alliance to End Homelessness. While there are a number of organizations that work to alleviate the suffering caused by homelessness, you might still be moved to donate directly to homeless individuals. This type of direct giving, while a compassionate response, does not count as a charitable contribution for tax purposes.
Giving to Individuals
The Internal Revenue Service has specific rules regarding what qualifies as a deductible charitable contribution. Charitable giving that falls outside of those perimeters does not qualify for a tax deduction. The IRS specifically prohibits tax deductions for gifts to individuals. You cannot deduct gifts to a homeless person or to an otherwise qualified organization if that gift is earmarked for the benefit of a particular person or family.
Some fine organizations that help homeless people are not qualified to receive tax-deductible donations. For example, your local chamber of commerce might have a coat drive to help the homeless in your city during the winter. Business organizations such as chambers of commerce and other business leagues or organizations do not qualify as charitable organizations. When in doubt about an organization's status, match the organization through the IRS' online Exempt Organizations Select Check.
If you want to deduct your charitable contributions to a qualified organization that helps homeless people, you need to document your giving. If you give cash, you'll need a receipt, regardless of the size of the donation. You'll also need documentation if you donate merchandise, such as clothing or a vehicle, with a fair market value of more than $250. If you donate merchandise with a fair market value of less than $250 you need to document your gift, but if it is unfeasible to get a receipt, for example if you drop off a bundle of clothes at an unmanned drop-off site, it is not absolutely required.
You can deduct your contributions to qualified charitable organizations only if you itemize your deductions when you file your federal income tax return. If your combined itemized deductions are less than the standard deduction for your filing status, you'll have a lower tax obligation by claiming the standard deduction. But you'll still have the good feeling of having helped those less fortunate than yourself.
- IRS: Publication 526, Contributions to Individuals
- IRS: Publication 526, Contributions to Nonqualified Organizations
- IRS: Exempt Organizations Select Check
- IRS: Publication 526, Records To Keep
- IRS: Topic 506 - Charitable Contributions
- Homelessness Research Institute: The State of Homelessness in America 2012
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.