The election is coming down to the wire, and you’re probably getting lots of robo-calls and emails begging for campaign contributions. Are such contributions deductible? As you might suspect, the answer is "no."
Whether you give money to a political campaign, political party or political action committee, the amount is never tax deductible — and need not be reported to the IRS.
Although you can’t deduct money you contribute to a political candidate or campaign, you may make tax-deductible donations to certain types of nonprofit organizations that are involved in the electoral process in a way that does not involve favoring or opposing candidates for office.
We’re talking about donations to "public charities," also called Section 501(c)(3) organizations. These are tax-exempt nonprofits formed for charitable, religious, scientific or educational purposes. Public charities include groups such as churches, schools, nonprofit hospitals, and food banks.
However, they also include nonprofits whose mission is to educate the public on political and policy issues. Examples include the Center for Auto Safety, which says its mission is to "provide consumers with a voice for auto safety"; the American Enterprise Institute, whose mission is to "expand liberty and strengthen free enterprise"; and People for Ethical Treatment of Animals (PETA), whose mission is to "put a stop to cruelty to animals."
However, public charities may play only a limited nonpartisan role in elections. They are flatly prohibited from intervening in political campaigns in any manner whatsoever, whether by endorsing or opposing candidates for public office, mobilizing supporters to help elect or defeat candidates, or giving money to political campaigns or political parties.
This prohibition applies to all political campaigns for elective office, including those at the federal, state and local level, and even includes elections in foreign countries. A nonprofit that violates these rules can lose its tax exemption.
Public charities can engage in four types of election-related activities, if done in a nonpartisan way.
Issue advocacy: Public charities can engage in issue advocacy — that is, they cay attempt to influence public opinion on political issues, including those that divide the candidates in an election. For example, a public charity may advocate for the abolition of the death penalty by issuing publications, sponsoring public forums on the issue, or sending out mailings. However, public charities cannot engage in any issue advocacy that attempts to influence public opinion about candidates running for office — for example, they cannot make comparisons between candidate proposals or positions on issues.
Helping people vote: A public charity may work to help people vote. This includes voter education activities and voter registration and get-out-the-vote drives. For example, a public charity can offer rides to the polls, canvass the neighborhood, and hand out voter information, or call voters about the election. However, it can’t engage in any of these activities in a way that favors or opposes any candidate for office.
Sponsoring candidate appearances: Public charities may also invite political candidates to speak at events they sponsor. However, the nonprofit must ensure that all candidates are invited and no fundraising occurs at the event.
Voter guides: Finally, public charity may prepare and distribute nonpartisan voter guides to help voters compare candidates’ positions on issues.
By giving money to a public charity that engages in these activities, you can help it perform its mission and get a tax deduction. The organization should give you a letter confirming the gift and the amount. Such donations need not be reported to the IRS by the nonprofit unless the gift is equal to 2 percent of the total contributions received by the organization, or $5,000, whichever is greater.
If you’re not sure whether a nonprofit is a Section 501(c)(3) public charity, you can check the IRS website, which maintains a list of public charities. You can also call the IRS at 877-829-5500.
Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.
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