Heartfelt appeals to help somebody during a medical crisis or help a grieving family are familiar to us all. Whether in the form of a jar at the check-out or a direct request for donations, these appeals sometimes prompt clients to ask if a donation to the cause is tax-deductible. Often, the answer is no.
Taxpayers can deduct contributions only if they make them to qualified organizations, which, apart from churches and governments, are organizations granted nonprofit status by the IRS. Contributions made to specific individuals, political organizations and candidates are not deductible. You may not deduct the value of your time or services, nor generally can you deduct the cost of raffle tickets, bingo cards, or other games of chance. A good quick reference guide is IRS Publication 526, Charitable Contributions, which is available free at irs.gov.
The best advice for clients in these matters is to have them find out if there is a qualified charitable organization sponsoring the fundraiser and if so, to get a donation receipt. If not, the donation is a gift of the heart, but not the IRS.
The Garlough Law Firm, PLLC