Tax Tip: Donations You Can't Deduct

ADVERTISEMENT

NEW YORK (MainStreet) — Here in my Tax Tips column I usually talk about what you can deduct. Today I want to talk about what you cannot deduct as a charitable contribution.

You cannot deduct contributions made directly to a person or family, regardless of the person or family’s financial situation or health status.

If you give a used coat to a homeless person, you cannot deduct the value of the coat, but if you give a used coat to the Salvation Army or other charity that will give the coat to a homeless person, that is deductible.

Similarly, if you give money directly to a family whose house has burned down or been damaged by flooding, it is not deductible. To get a deduction you must give the money to a charity that provides disaster relief, such as the Red Cross.

You cannot deduct contributions to an organization created to lobby for changes to federal, state or local laws, or to political organizations and election campaigns.

You cannot deduct the value of blood you have donated.

And, perhaps the most frequent mistake I have seen over the years: You cannot deduct the cost of raffle tickets as a charitable deduction, unless you give the ticket back to the charity so they can sell it again. When you buy a raffle ticket you are not making a donation; you are taking a chance on winning a prize. Raffle tickets can, however, be deducted as gambling losses if you are reporting gambling winnings.

For all the latest tax tips as you prepare your 2010 returns, check out MainStreet's Tax Center, updated daily!

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

Show Comments

Back to Top