Looking for Tax Breaks? Not All Political Contributions Are Tax-Deductible
When tax season arrives, many expenses are tax-deductible. Are political contributions tax-deductible? Here are a few things to consider before donating.
Much like sports and the way that fans support their teams by purchasing tickets and merchandise, people also give monetary contributions to political campaigns. People who follow politics may do so by contributing to a political candidate's campaign and attending a rally. Are political contributions tax-deductible? Pew Research Center released a few facts about political donations.
According to the center, people are more likely to donate to political campaigns now than they were 20 years ago. The number of people who donate to someone running for a public office doubled from 6 percent in 1992 to 12 percent in 2016. Also, people who keep up with politics and government affairs closely are more likely to donate with 21 percent saying that they make a donation compared to the 4 percent who infrequently follow politics and said they would donate.
Tax-deductions have certain limitations.
Making a donation to a political candidate comes with its limitations and requirements. Foreign nationals, government federal contractors, global organizations, and corporations aren't allowed to make contributions. However, this doesn't apply to PACs that may be established by the previously named entities. According to the Federal Election Commission, individuals and committees are allowed to make contributions.
Committees include state, district, local, PAC multicandidate, and non-multicandidate. Each category for donors has its own contribution limitations. For example, an individual making a donation to a candidate committee can't make a donation larger than $2,900. An individual making a donation to a party committee can't make a donation greater than $10,000 per year combined.
Political contributions aren't tax deductible.
A tax deduction allows a person to reduce their income as a result of certain expenses. There are five types of deductions for individuals — work-related, itemized, education, healthcare, and investment-related deductions. Each of the types of deductions has subcategories such as charitable contributions, student loan interest, and capital losses. For example, capital losses have deduction limits.
According to the IRS, “If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the less of $3,000 or your total net loss shown on line 16 of Schedule D (Form 1040).” However, political contributions and tax deductions are another story. According to Intuit by TurboTax, political contributions aren't tax-deductible, “While charitable donations are generally tax-deductible, any donations made to political organizations or political candidates are not.”
Charitable donations that can be considered tax-deductible are those made to churches such as tithes, ones made to governments (state, local, and federal) that don't influence legislation, and non-profit schools and organizations (for example, hospitals, schools, the American Red Cross, and Girl Scouts of America).
So, if a person is making donations to a campaign or political leader with the hope of being able to use it as a tax deduction, they should instead opt to make donations to other qualifying organizations and businesses.