US vs. France - Taxation Representations

[ALAIN DELASSUS]

 Hello! As a French IRS retired inspector  I would like to know where I can find on the net the US IRS rules about the deductions from  income tax you can get when you donate to non for profit organisations and especially to tourist railways like WW&F.  In France  no deduction is technically allowed in that case but most of the French tourist railways can get subsidies from the national or local authorities.

[Bill Baskerville]

Hello! As a French IRS retired inspector  I would like to know where I can find on the net the US IRS rules about the deductions from  income tax you can get when you donate to non for profit organisations and especially to tourist railways like WW&F.  In France  no deduction is technically allowed in that case but most of the French tourist railways can get subsidies from the national or local authorities.

Alain, 

Try https://www.irs.gov/charities-non-profits/applying-for-tax-exempt-status

In this country Non profit organizations can apply for tax exempt status and they are issued a tax exempt number.  Each donation to an organization must be acknowledged by a return letter which the tax payer keeps to support his or her donation should the IRS audit their return.

The organization application is usually fairly simple and easy to obtain.  The organization itself must file an annual return to the IRS, but doesn't pay any taxes.

I hope this helps.

Bill

[ALAIN DELASSUS]

Thank you so much Bill for the link I'm definetely going to learn interesting things . According to your kind explanations it  seems to me that the procedure is pretty much the same as in France but the organization application is not that easy to obtain. Although most of the French tourist railways don't pay any tax as non for profit organizations there are quite a lot of other conditions to meet with in order that donators are allowed to deduce a percentage of their  donations from their income tax. Actually I'm fairly sure that very few of the French tourist railways have considered asking for it because it's popularly thought that only charity organizations as Red Cross and such likes are concerned. In January I've prompted  and told the AMTP treasurer the procedure to submit for the approvoal of the French IRS. Hopefully it'll  work.

[Bill Baskerville]

Alain,

Good for your prompt action.  Every little bit helps.

Bill

[Ted Miles]

Alain,
          I gave a contribution to a Canadian railroad museum; but my tax adviser said the IRS would dis-allow it as Canada is a foreign country, I am afraid that you in France may run into this same regulation about foreign donations. But I enjoy your comments.

Ted Miles, WW&F Member

[ALAIN DELASSUS]

Ted I  do know that issue.  Out here even  the contribution I give to AMTP can't be deduced from my income tax for the moment. If one day AMTP meets with  the approvoal of the French IRS  66% of my contribution will be deduced from my income tax. What is the percentage  of deduction in the US for a donation to a tourist railway ?

[Bill Baskerville]

Alain, In the US the full amount of one's contribution is deducted from income.  That means that the amount that is deducted from one's taxes is dependent on one's either effective or marginal tax rate.  Most Americans are in the middle effective tax rate which is 12.7 percent.  The marginal tax rate for the middle income filers is about 22%.  So if one is an average American tax payer, they would be able to deduct 22% of their contribution, more or less, from their Federal Income Tax. 

Said simply, if I am a middle American and donated $100 to the WW&F, about $22 of that would be deducted from my Federal taxes.  In Virginia, which has a 5.75% marginal income tax rate another $5.75 would be deducted from my State taxes.

If this is too confusing, please blame the Federal Government.  It is outrageously complex because our government uses our tax system for social engineering and it is also influenced from the results from lobbying, which is favoritism.

Stay safe.

Bill

[Ed Lecuyer]

And it changes again...

The CARES act, which recently passed, has made a change to the 2020 US Tax Code. In short, individuals who take the "Standard Deduction" can now also deduct up to $300 in charitable donations. There are more exceptions, etc., details at:
https://www.forbes.com/sites/ashleaebeling/2020/03/25/new-universal-tax-break-for-charitable-donations-included-in-updated-2-trillion-covid-19-stimulus-bill/

[ALAIN DELASSUS]

Thank you so much  Bill and Ed for those clarifications. In France if you give 100 Euros  to a none for profit organization that has  met with the approvoal of the French IRS to benefit from tax deductible donations , 66 Euros will be deducted from the amount of your income tax no matter what your tax rate is.  There is still a limit , the total amount of your donations must not exceed 20% of your taxable income. That system seems more profitable for the taxpayer than the US one  but on the other hand it seems that it's more difficult for a non for profit organization to meet the French IRS approvoal. Actually in France very few tourist railways have got the IRS appovoal but I'm fairly  sure that quite a lot of them have never thought  of submitting for it  like the AMTP which treasurer I have prompted to do it recently. But now that all hell broke loose....