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A problem with internationalization: One difficulty with wanting to contribute to projects like this is that you don't get tax credits on donations outside of y

by marquis 12y ago

A problem with internationalization: One difficulty with wanting to contribute to projects like this is that you don't get tax credits on donations outside of your home country, which means I or my business cannot contribute any significant amount. I understand it would be a mountain of paperwork (and probably a loss in terms of accounting costs) for Watsi to be registered as a non-profit in every country.

lubos 12y ago
Is this some kind of Scrooge McDuck excuse? If your income tax rate is 30%, on $1,000 donation, you get only $300 back in tax credits. If donation is not tax-deductible, then you won't get $300 so don't donate $1,000. Donate only $700.
- marquis 12y ago
  Are you not then further taxed on that $700 as it must be classified as cash spending?
  - lubos 12y ago
    No, you are not. Freely given donations for which nothing is given in return are outside the scope of VAT, GST or sales tax.
    - marquis 12y ago
      Where I pay taxes, I cannot donate money to non-profit registered in another country and write off the tax. Therefore, if I am a business my donation is taxed as cash spending. If I have already paid PAYE tax, I cannot apply for a tax refund on my donation. My country is not subsiding another country's non-profits. Neither is yours. An example from the U.S.: http://nonprofit.about.com/od/fordonors/qt/internationaltaxded.htm http://nonprofit.about.com/od/fordonors/qt/internationaltaxd...
      - deleted 12y ago
        [deleted]
  - dragonwriter 12y ago
    No, because my country (the USA) doesn't tax "cash spending". It taxes income, and it (well, in most cases, individual states), taxes certain sales (generally, this tax is collected by the seller, but when its a foreign seller the buyer may be resposible for it as a "use" tax.) If I don't get a taxable good or service in exchange, its not a taxable sale, and the seller doesn't have to collect sales tax (and, if the seller is foreign, I don't have to pay use tax.) For a foreign "non-profit", I won't get a deduction from taxable income for income tax purposes for the donation the way I would if the donation was to a local non-profit [1], but I don't have to pay an extra "cash spending" tax the way you describe. [1] Actually, strictly this is a local charity, which is a narrower category than non-profits. Donations to local non-charity non-profits are generally not tax deductible to the person making the donation, even if the non-profit is itself tax-exempt.
    - marquis 12y ago
      I'm genuinely not understanding this. Taxing "income" and "cash spending" is the same (at least, where I am taxed). If I am a business and have earned $1000, keeping it in the bank is exactly the same as if I withdrew that $1000 and put it under the bed in $20 notes. I pay tax on that $1000. I can give it to Watsi, who is outside of my country's tax jurisdiction, and I must pay tax on that $1000.
      - jacalata 12y ago
        You were taxed when you received that money, so you don't have $1000, you only have $700 (assuming a 40% tax rate - sub in your own rate as applicable). If you get a tax deduction for giving to Watsi, you can give them $1000 and only lose $700 out of pocket. If you do not get a tax deduction for giving to Watsi, then you can give them $700 and lose $700 out of pocket. In either case, you are giving them $700 out of pocket.
        dragonwriter 12y ago
        > You were taxed when you received that money, so you don't have $1000, you only have $700 (assuming a 40% tax rate - sub in your own rate as applicable). 30%, actually, or $600 @ 40%.
- deleted 12y ago
  [deleted]
dceddia 12y ago
I finished reading this thread thinking that Watsi donations are not tax deductible in the US... In case anyone else was confused like I was, I just wanted to clarify -- Watsi donations ARE TAX DEDUCTIBLE in the US. See their FAQ, way down the bottom: https://watsi.org/faq https://watsi.org/faq

by marquis 12y ago

lubos 12y ago

Is this some kind of Scrooge McDuck excuse? If your income tax rate is 30%, on $1,000 donation, you get only $300 back in tax credits. If donation is not tax-deductible, then you won't get $300 so don't donate $1,000. Donate only $700.

marquis 12y ago
Are you not then further taxed on that $700 as it must be classified as cash spending?
- lubos 12y ago
  No, you are not. Freely given donations for which nothing is given in return are outside the scope of VAT, GST or sales tax.
  - marquis 12y ago
    Where I pay taxes, I cannot donate money to non-profit registered in another country and write off the tax. Therefore, if I am a business my donation is taxed as cash spending. If I have already paid PAYE tax, I cannot apply for a tax refund on my donation. My country is not subsiding another country's non-profits. Neither is yours. An example from the U.S.: http://nonprofit.about.com/od/fordonors/qt/internationaltaxded.htm http://nonprofit.about.com/od/fordonors/qt/internationaltaxd...
    - deleted 12y ago
      [deleted]
- dragonwriter 12y ago
  No, because my country (the USA) doesn't tax "cash spending". It taxes income, and it (well, in most cases, individual states), taxes certain sales (generally, this tax is collected by the seller, but when its a foreign seller the buyer may be resposible for it as a "use" tax.) If I don't get a taxable good or service in exchange, its not a taxable sale, and the seller doesn't have to collect sales tax (and, if the seller is foreign, I don't have to pay use tax.) For a foreign "non-profit", I won't get a deduction from taxable income for income tax purposes for the donation the way I would if the donation was to a local non-profit [1], but I don't have to pay an extra "cash spending" tax the way you describe. [1] Actually, strictly this is a local charity, which is a narrower category than non-profits. Donations to local non-charity non-profits are generally not tax deductible to the person making the donation, even if the non-profit is itself tax-exempt.
  - marquis 12y ago
    I'm genuinely not understanding this. Taxing "income" and "cash spending" is the same (at least, where I am taxed). If I am a business and have earned $1000, keeping it in the bank is exactly the same as if I withdrew that $1000 and put it under the bed in $20 notes. I pay tax on that $1000. I can give it to Watsi, who is outside of my country's tax jurisdiction, and I must pay tax on that $1000.
    - jacalata 12y ago
      You were taxed when you received that money, so you don't have $1000, you only have $700 (assuming a 40% tax rate - sub in your own rate as applicable). If you get a tax deduction for giving to Watsi, you can give them $1000 and only lose $700 out of pocket. If you do not get a tax deduction for giving to Watsi, then you can give them $700 and lose $700 out of pocket. In either case, you are giving them $700 out of pocket.
      - dragonwriter 12y ago
        > You were taxed when you received that money, so you don't have $1000, you only have $700 (assuming a 40% tax rate - sub in your own rate as applicable). 30%, actually, or $600 @ 40%.
deleted 12y ago
[deleted]

dceddia 12y ago

I finished reading this thread thinking that Watsi donations are not tax deductible in the US... In case anyone else was confused like I was, I just wanted to clarify -- Watsi donations ARE TAX DEDUCTIBLE in the US. See their FAQ, way down the bottom: https://watsi.org/faq https://watsi.org/faq