Donating to nonprofit before it receives 501c3 exemption

[ben_taxes]

Hello,

I am considering donating to a nonprofit which is in the process of receiving 501c3 exemption, but has not yet received its exemption. I understand the law says that donations made to an organization before it receives 501c3 exemption do become tax-deductible when it eventually receives 501c3 exemption. However, the timing of this process is not clear: if I donate in 2021 and the organization receives exemption in late 2022 after I've already filed 2021 taxes, would I claim the deduction against my 2021 income (since I made the donation in 2021) or against my 2022 income (since I would have already filed 2021 taxes without it)?

Thank you so much

[M-MTax]

The donation relates back to the date of filing but you'd have to amend with the facts you posted.

[rjs · Accepted solution]

You can only claim the deduction in the year that you made the donation. If you make a donation in 2021, you have to claim it on your 2021 tax return. If the organization has not obtained tax exemption by the time you file your 2021 tax return, you have to file without claiming the deduction. If the organization later receives exemption that is effective retroactively, you can amend your 2021 tax return to add the deduction. You cannot deduct a donation that you made in 2021 on your 2022 tax return.

[ben_taxes]

Thank you. My goal is to deduct from my 2021 taxes, so that would work well - to confirm, I can amend my 2021 taxes and receive a refund for a 2021 donation, even if the amendment is done in 2022 or 2023?

[rjs]

Yes, you can amend your 2021 tax return for an additional refund up until April 15, 2025.

This is assuming, of course, that your total itemized deductions are more than your standard deduction. If not, the additional donation won't make any difference.

[M-MTax]

I can amend my 2021 taxes and receive a refund for a 2021 donation, even if the amendment is done in 2022 or 2023?

Yes and beware that there is a 3 year statute of limitations and that you have to itemize deductions on SCH A for the donation to have any effect.

[Opus 17]

@ben_taxes 

Be aware that there is an additional issue with donating a vehicle.  The organization is required to give you a form 1099-C if you are claiming a value of $500 or greater, but they are not required to give you this form until they have disposed of the vehicle. You cannot claim the deduction even if the organization receives their exemption, without this form.

If the organization uses the vehicle for their charitable purpose, then you can claim the fair market value of the vehicle as your donation value.  For example, if you donate to meals on wheels, and they use your vehicle to deliver meals.  Or if you donate to a homeless shelter, and the shelter gives your vehicle to one of their clients so the client can take a new job.

However, if the organization sells the vehicle to raise funds, then you are limited in your donation value to the amount of funds the organization actually receives.  The organization doesn’t have to provide the 1099C form until they have disposed of the vehicle, or they have determined that it will be kept and used for the charity.

Before you can amend your tax return to claim this donation, you will need the form 1099C from the charity as well as the charities final 501(c)(3) approval.