Rules for Tax Deductions, Reporting and Privacy of contributions to Charities and Political Groups

Categories: Taxes

There are many regulations regarding the reporting requirements, privacy and income tax deductibility of cash donations to organizations. Here is a brief list of some of the rules for cash gifts:

  • Non-Profit charities 501(c)3 institutions include schools, churches, universities, hospitals and politically titled groups with a main emphasis of education. Deductions for contributions are limited to 50% of the donors adjusted gross income (AGI). There are usually no limits on donations for individuals.
  • Donations of cash gifts to Private Foundations organized as 501(c)3 for religious, charitable, scientific, literary, or educational purposes, are deductible up to 30% of AGI.
  • Social welfare non-profits 501(c)4 contributions are not deductible, but if $5,000 or larger they must be reported. These groups primarily promote social welfare, can lobby and participate in campaigns, but can’t contribute to candidates.
  • Donations to Super PACs are not deductible, and there are no limits or reporting requirements to the IRS. Information about the donors are not private, but the information might not indicate the actual person who made the donation, since it can be routed through a private company.
  • Individual’s donations to political parties, campaigns and some super PACs are limited to $2,500 per election or campaign, $5,000 to a PAC, and up to $30,800 to a national political party committee. Donations of $200 or more must be reported to the Federal Election Commission (not the IRS) by individuals, are not deductible and the information is made public.
  • Membership dues to 501(c)6 organizations are deductible, except for the portion used for political causes.

In addition, there are many other rules, sometimes complex, for donations of cash and non-cash gifts such as property, partial interests in property, property that earns income, life insurance, annuities, artwork, IRAs and qualified assets, securities, and assets in charitable trusts. This is just a brief review, individuals should seek the advice of professional tax advisers.