With the 2020 elections behind us and tax-filing season now here, you might be wondering whether or not you can deduct political contributions you made last year. The short answer: No, political contributions are not tax-deductible.
This applies to a wide range of things associated with politics, including political candidates and parties, political action committees (PACs), campaign committees, advertisements in convention bulletins, and admission to dinners or events that benefit a political candidate or party.
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What About Volunteer Time and Out-of-Pocket Expenses?
Time spent and expenses incurred volunteering for a political campaign are also non deductible. This includes things like supplies and transportation to and from campaign events. IRS regulations make it clear that neither volunteer time nor out-of-pocket expenses donated to political candidates and parties can be deducted from gross income for income tax-filing purposes.
In addition, businesses cannot deduct contributions they make to political candidates and parties or expenses related to political campaigns. And if you check the box on IRS Form 1040 that asks if you want to give $3 to the Presidential Election Campaign Fund, this isn’t deductible either.
Political Contributions vs. Charitable Donations
All of this catches some people by surprise because contributions of cash and property are tax-deductible if taxpayers meet certain criteria and itemize deductions on their tax return. “If charitable donations are tax-deductible, then why aren’t political contributions?” many people wonder.
IRS rules specify that donations and contributions made to tax-exempt charitable organizations — also known as 501(c)(3) organizations — may be tax-deductible under certain conditions. However, these organizations are specifically prohibited from attempting to influence legislation or participating in political campaigns.
As a result, political campaigns cannot be classified as charitable or 501(c)(3) organizations. And political donations cannot be treated the same was as tax-deductible contributions. If you’re unsure about whether a donation you have made is considered political or not, use the IRS Tax-Exempt Organization Search Tool to see if the organization you donated to is considered a 501(c)(3) organization or not.
Limits on Political Contributions
Note that even though political donations are not tax-deductible, there are limits to how much money can be donated for political purposes. An individual may donate up to $2,800 to a candidate committee in any one election, up to $5,000 to a PAC annually, up to $10,000 to a local or district party committee annually, and up to $35,000 to a national party committee annually.
What Is a Deductible Charitable Contribution?
Given that political donations aren’t tax-deductible, it’s important to familiarize yourself with IRS rules regarding the deductibility of charitable contributions. You can generally deduct cash, securities and property donated to qualified charitable or 501(c)(3) organizations on your federal income tax return. Be sure to keep good records supporting your charitable contributions.
Read More: The Tax Benefits of Charitable Giving
For cash contributions, retain a cancelled check or bank or credit card statement, or a receipt or letter from the charity that shows the charity’s name and the date and amount of the contribution. Contributions of $250 or more must have a written acknowledgement of the donation from the charity.
For non-cash contributions valued at less than $500, you must obtain a receipt from the charity that contains a description of the property. For non-cash contributions valued at between $500 and $5,000, you must obtain an acknowledgement that includes how and when you obtained the property and the cost or other basis of the property. And for non-cash contributions valued at more than $5,000, you must obtain a written appraisal of the property from a qualified appraiser.
In general, remember that you can only deduct charitable contributions if you itemize deductions by filing Schedule A along with Form 1040. If you claim the standard deduction, you can’t deduct charitable contributions. However, for tax year 2020 you can deduct charitable contributions up to $300 even though you do not itemize deductions.
Be sure to consult with a tax professional if you have more questions about the deductibility of political donations or charitable contributions.
You can organize and track your donations (and all of your financial accounts and transactions) using Personal Capital’s free financial dashboard. With this technology, you know exactly where you stand financially.
Personal Capital compensates Brian E. Leyde (“Author”) for providing the content contained in this blog post. The information and content provided herein is general in nature and is for informational purposes only. Individuals should contact their own professional tax advisors or other professionals to help answer questions about specific situations or needs prior to taking action based on this information. Tax laws and authorities are subject to change, either prospectively or retroactively, and any subsequent change could have a material impact on your situation.