Are Political Donations Tax Deductable?

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The more familiar you become with tax law, the more money you potentially stand to save each and every year.  One of the more common questions asked is “Are political contributions tax deductible?”  Whether it’s your county mayor or the future President of the United States, the rules on taking advantage of these tax deductions are all the same.

Donations are deductible if the organization you give to is a 501(c)(3) tax-exempt charity. This means that the organization has tax-exempt status, which is a special designation obtained from the IRS.  Some organizations, mostly churches and religious organizations, are not required to apply for tax-exempt status but others like political campaigns and offices are.

Many political organizations are automatically disqualified from this status.  Any donation to a political party, campaign, or action committee is non-deductible. Other non-deductible contributions are those to individual people, labor unions, business associations, for-profit schools, for-profit hospitals, foreign governments, and fees paid to associations or state or municipal governments.

So, if you can’t donate to parties or campaigns, how can you make your political voice heard and reap the benefits of a tax deduction? Well, not all tax-exempt organizations are what you would traditionally think of as charities. While there are plenty of tax-exempt organizations dedicated to feeding the hungry, there are many organizations that express opinions about political issues of all types, across the entire political spectrum.

How can an organization express that opinion?  IRC 501(c)(3) tax-exempt organizations are legally prohibited from directly or indirectly campaigning for or against any candidate for political office.  This includes financial campaign contributions and verbal or written statements made on behalf of the organization.  If an organization does so, it puts its tax-exempt status at risk.  That said, there are certain things that tax-exempt organizations can legally do that most people would consider “political.” For example, organizations can hold events or publish documents to educate voters (provided that the materials show no sign of bias).  Voter drives or registration efforts, as long as they are conducted in a bipartisan manner, are not prohibited.

Also, public charities can also take part in a limited amount of lobbying.  The IRS establishes certain guidelines that dictate how much time and money organizations can spend on lobbying efforts without jeopardizing their tax-exempt status.  So, while you can’t make a tax-deductible donation to a candidate or campaign, you can donate to an organization that can lobby candidates about issues you care about. What’s more, not every communication between an organization and an official is considered lobbying.  Organizations are allowed to communicate with officials to ask them to make an issue a priority and educate the official about an issue.

So, if you’d like to make your voice heard and save a little on your tax bill, the good news is that it’s doable. You just need to find an organization whose position matches your own.  One last caveat is that in order to reap the benefits of a tax-deductible contribution, you’ll need to itemize your deductions on your tax return. So, if you’re one of those Americans who takes the standard deduction, the bad news is that however you express your voice financially, you’ll have to pay using after-tax dollars.

Published or Updated: February 16, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. CreditShout says:

    Thanks for this enlightening post. I know a ton of people who donate to political campaigns and there are a lot of elections (mostly local) coming up in November.

  2. Andy says:

    Wow, I thought all contributions are tax deductible. Good to learn something new.

  3. Russell Redrick says:

    Fair Taxation

    Have you noticed that our elected officials want to continuously come up with a new or higher tax on just about everything we do or consume? Have you ever noticed that these taxes rarely effect then to a large degree? I am not speaking of just the federal level, local city and state taxes on some things continually pop up or increased. Then on top of that we pay sales tax on the taxes on some items. For an example if buy a package of cigarettes included in the purchase price is the taxes, this is an average of about $2.47 nationwide. When this pack of cigarettes is rang up at the store the sales tax is paid on the total price. You are paying about .17 cents per pack sale tax on the taxes. Have you ever bought seeds for your garden or fruit trees, fertilizers for your garden at a large chain store? You paid sales tax on these items which are sales tax exempt in SC. With the new computers this has changed in some stores. These are just a few such items. Well we the common people are paying taxes and taxes on taxes on many necessary and luxury items.
    Many of the taxations center on select groups. Beer, wine and liquor tax pin point the group who consumes these things. About 52% use alcohol, Source: Summary Health Statistics for U.S. Adults: National Health Interview Survey.
    How about the tobacco and cigarette tax? According to my research 43.4 million people smoke and with the 2010 census figures this is about 15% and the published figures for 2007 was 19.8%. Therefore this tax pinpoints only about 20% of the population.
    Some taxes are fair by covering most of the people. The gasoline tax is well distributed. There are 88% of the people in the US that are licensed drivers. This is fair taxation. Just about everyone pays sales, tax this is fair.
    My question is this. Here is the rub. Our elected officials on all levels from city, county, state and federal all raise donated funds for campaigning. The total people running for federal elections next year 2012 will receive and spend somewhere in the neighborhood of 17 to 22 billion dollars. The city, county and state elections nationwide will receive and spend 5 to 8 billion dollars in campaign funds. This money has no taxes applied. This is the same elected officials that vote to tax just about everything. Sure, they also have to pay many of these taxes their self. As near as I can find out campaign donations are untouchable. The total amount of the funds is more than the combined profits of a large percentage of all the small businesses in the US. Taxation should be equally distributed to all the people but it is not. Therefore if this is the system some groups pay taxes where others do not why not tax the people who make the tax laws.
    The gist of the situation is why the group of officials who legislates these taxes does not put a tax on things that pertain only to them. A %10 federal tax on all campaign donations would sure raise a lot of funds.
    It is my personal conviction that anyone who has never had to search under the couch cushions and under the car seats for change to make it to pay is not qualified to represent the common people.

    • K Windy says:

      TO THE GUY THAT DOESN’T LIKE TAXES ON CIGERETTES AND BOOZE. THESE ITEMS CAUSE HIGHER HEALTH ISSUES AND COST OUR COUNTRY EVERY DAY IN THE PROBLEMS THEY CREATE WHETHER IT BE LAW ENFORCEMENT, HEALTH ISSUES (AMBULANCES), FIRES, ……I THINK ANYTHING THAT PUTS US IN MORE DANGER OF BEING UNHEALTHY….JUNK FOOD, POP,….SHOULD HAVE TAXES ON THEM OVER AND ABOVE REGULAR FOOD ITEMS SUCH AS LEAN PROTEINS, VEGETABLES AND FRUITS. I RARELY USE ALCOHOL AND JUNK FOOD AND POP AND DON’T SMOKE. I SHOULDN’T HAVE TO SUPPORT THE PROBLEMS YOUR HABITS CREATE. YOU WANT THEM….YOU BUY THEM…..YOU PAY THE PRICE THEY COST IN RELATED COSTS.

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