What Is Pub78 and How Is It Used for Tax-Exempt Donations?

Donating to a charity can have tax benefits, but not all organizations qualify for deductions. The IRS provides tools to help donors verify whether their contributions are eligible. One key resource is Pub78, which helps confirm if an organization qualifies for deductible donations.

Where to Find Pub78

The IRS no longer publishes Pub78 as a static document. Instead, it has transitioned to an online database called the Tax Exempt Organization Search (TEOS), which provides real-time access to eligible organizations. This tool allows users to verify if a nonprofit is recognized under Section 170(c) of the Internal Revenue Code, governing tax-deductible contributions. The TEOS database, available on the IRS website, is updated regularly.

Donors can search TEOS by organization name, EIN (Employer Identification Number), or location. The results display key details, including tax-exempt classification, donation eligibility, and any revocations. Nonprofits lose tax-exempt status if they fail to file Form 990 for three consecutive years, per the Pension Protection Act of 2006. If an organization appears in the database but has a revoked status, donations may not be deductible.

Confirming Tax-Exempt Status

Before claiming a deduction, donors should verify an organization’s tax-exempt status. A nonprofit may qualify initially but lose its standing due to compliance failures, IRS audits, or operational changes. Excessive lobbying, political campaign activities, or unreported unrelated business income can result in revocation under IRC Section 501(c)(3).

Certain nonprofits, such as private foundations, have deductibility restrictions. Donations to public charities generally allow deductions up to 60% of adjusted gross income (AGI), while contributions to private foundations are typically capped at 30% of AGI.

Some organizations may be listed as tax-exempt but have restrictions due to IRS sanctions or compliance issues. The IRS may impose penalties or revoke status temporarily if a nonprofit fails to meet reporting obligations, such as filing Form 990-T for unrelated business income tax (UBIT). Donors contributing to an organization under review or facing penalties risk having their deduction disallowed.

Using the Publication for Donation Records

Accurate donation records are necessary for substantiating charitable contributions. The IRS requires donors to keep proper documentation, particularly for contributions exceeding $250, which must include a written acknowledgment from the recipient organization. This acknowledgment should state the donation amount, confirm whether goods or services were received in exchange, and describe any non-cash contributions. Without this documentation, deductions may be disallowed during an audit.

For non-cash donations, additional requirements apply. Donations of property valued over $500 require Form 8283, detailing acquisition details and fair market value. If the value exceeds $5,000, an independent appraisal is generally required, except for publicly traded securities. Charities receiving non-cash donations valued at $500,000 or more must report the gift’s disposition using Form 8282 if sold within three years.

Reporting on Tax Returns

Claiming charitable deductions requires adherence to IRS rules to avoid audits or disallowed claims. When reporting donations on Schedule A (Form 1040), taxpayers must itemize instead of taking the standard deduction. This means total itemized deductions—including mortgage interest, medical expenses exceeding 7.5% of AGI, and state and local taxes (capped at $10,000)—must surpass the standard deduction threshold: $13,850 for single filers and $27,700 for married couples filing jointly in 2023.

For appreciated assets like stocks or real estate, deductions are based on fair market value if held for over a year, avoiding capital gains tax. However, for short-term holdings, only the original purchase price is deductible. Donations exceeding $500,000 in non-cash assets require a qualified appraisal with the return.

Corporations also benefit from charitable giving, though deductions are limited to 10% of taxable income under IRC Section 170(b)(2). The 2020 CARES Act temporarily increased this cap to 25%, but the provision expired in 2021. Businesses donating inventory may claim deductions based on cost or fair market value, provided the contribution meets IRC Section 170(e)(3) requirements, such as benefiting the ill, needy, or infants.