Because the Arts Educators Group is incorporated in California as a Nonprofit Corporation, we want to clarify a few issues about tax deductibility of payments made to AEG.
- First, it is important to clarify that no payment made for goods or services is ever tax deductible as a charitable gift. When a payment is made to purchase something, then that is not charitable giving and hence, regardless of whether or not the recipient is a tax exempt organization, the payment itself is not deductible.
- For a payment to be tax deductible, it must be (a) charitable and (b) made to a tax exempt organization.
- "Charitable giving" is a contribution made without (the expectation of) receiving any consideration (goods or services, e.g.) in return. This may include an extra amount given at the time of purchase, however. For example, if a fundraising dinner is held and meals are charged at $15, but you choose to make a payment of $25, then the extra $10 is charitable giving.
- The receiving organization must be recognized by the Internal Revenue Service under section 501(c)3 of the tax code as a tax exempt organization for a payment to be tax deductible to the giver.
- At this time, the Arts Educators Group is NOT a tax exempt organization. Even though it is incorporated in the state of California as a Nonprofit Organization, we have not yet received Federal recognition as a tax exempt organization.
- AEG is in the process of filing for tax exempt status as a a 501(c)3 Public Benefit corporation. However, this process can take many months. Until such time as the IRS officially approves AEG as being tax exempt, no payments to AEG, charitable or otherwise, can be tax deductible.
Please note that this does not constitute legal or tax advice; as always, "Consult a professional"!!!
