Giving Season – What Isn’t Tax Deductible
/The last quarter of the year funds approximately 30% of annual giving to charity, with Giving Tuesday (the Tuesday after Thanksgiving) being wildly successful, reaching record highs for one-day giving. Are all your donations deductible if you file an itemized tax return?
With tragic crises and natural disasters around the globe, as well as other schemes, be sure your gifting is going to legitimate charities. Unfortunately, criminals crawl out of the woodwork to prey on uninformed individuals who simply want to make a difference, sometimes using names that sound like well-known charities or they may ask for gift cards and wiring money. Without doing some homework, it may go to a fake charity.
On occasion, qualified charitable organizations lose their exempt status because they do not file tax returns as required for three consecutive years, file incomplete tax returns, or do not meet their specified purpose. Once that happens, charitable gifts to them are not tax deductible.
GoFundMe campaigns (usually solicited via social media or the internet) of a personal nature are considered personal gifts and aren’t likely to be tax deductible. Note, however, GoFundMe charity fundraisers going to a qualified charity (not an individual) are deductible.
Political donations are used to influence the political landscape, but are not deductible, including those for lobbying the general public, campaign contributions to a political party or to any candidate running for public office. Even professional organization lobby groups have limitations on the deductible amount, which they will provide on their annual statement.
Authenticity and eligible status are key when deducting charitable donations. Some tips for safe giving include but are not limited to: Do not allow yourself to feel pressured to immediately give to a charity, especially on the phone or internet; and ensure your charity selections are qualified, legitimate and in conformity with the IRS by visiting the TaxExempt Organization Search Tool at IRS.gov. Happy giving!
- Pam Smitson, CPA, CGMA, Smitson Erhart-Graves Financial Advisors
