Generally, no deduction is permitted for contribution to a foreign charity. However, that does not include contributions to U.S. Charities that perform part of their charitable function outside the U.S. An exception to this rule is Mexican, Canadian and Israeli charities.
Canadian Charities - Certain Canadian charitable organizations covered under an income tax treaty with Canada are deductible. In order to deduct the contribution, the taxpayer generally must have income from sources in Canada.
Mexican Charities - Certain Mexican charitable organizations covered under an income tax treaty with Mexico are deductible. The organization must meet tests that are essentially the same as the tests that qualify U.S. organizations to receive deductible contributions. To deduct a contribution to a Mexican charity, the taxpayer must have income from sources in Mexico.
Israeli Charities - Contributions to certain Israeli charities organized under an income tax treaty with Israel may be deductible. The organization must be created and recognized as a charitable organization under Israeli law. The amount deductible is the amount that would normally be allowed under U.S. rules, but not more than 25% of AGI from Israeli sources.
For further information regarding the charity deduction provisions of the income tax treaties with Canada, Mexico and Israel, please call this office.