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Posted by Jim McClaflin, EA, NTPI Fellow, CTRC

Are Political Contributions Tax-Deductible?

Are Political Contributions Tax-Deductible?

It is all about making headlines and advertisements to gain speed for a candidate or campaign team during election seasons. Politicians dedicate the money, effort, and time to a campaign. They also make considerable donations to organizations like charities. If you also plan to make such a donation, it's good news to know such donations are not tax-deductible. 

Donating to political campaigns, political parties, and other groups with a political aim is considered a selfless act. Many people are still not conversant with tax deductibles when filing taxes. You can financially support your candidate without worrying about tax deductions. But don't expect a lower tax liability through these contributions.  

Are Political Contributions Tax-Deductible?

The IRS has clarified tax-deductible assets; among those not liable for tax deductions are political campaign donations. In other words, you have an opportunity to donate to your candidate, campaign group, or political action committee (PAC). Those that choose to join a campaign group or political organization are allowed. Their spending, such as transport fare, and supplies, during their stay in the political group is not tax deductible. Volunteers can enjoy tax-free expenses if only it's used for the goal of the political group.

Political Contribution Limits

However, there are limitations to the amount a volunteer can donate to a political campaign or group. Any amount above the stated is taxable by the IRS. You are allowed to donate about $2,900 to a campaign team per election. You can donate $5,000 each year to a political action group and about $10,000 each year to a local political committee.

If you want to win a candidate for a national party, you can donate up to $35,000 per year. Volunteers can call the Federal Election Commission to know their limits each election year. The group cannot use any amount beyond the stated above for the election. 

Difference Between Political Contributions And Charitable Donations

Political donations are considered charitable donations contributed by some people. However, there are differences from other philanthropic contributions, which are tax deductible. The IRS implemented Tax-Exempt Organization Search software to help businesses and citizens differentiate what is or is not taxed. The website will request your Employer Identification Number (EIN), the organization's name, and location. These parameters are used to determine if the donations are tax deductible.

You need to itemize each charitable donation made individually or by a business. These taxes should be documented and kept for future reference. You are to itemize your taxes on form 1040, Schedule A. This form itemizes your taxes to understand better what is or is not tax deductible. 

Political donations are not tax-deductible, but contributions to churches, mosques, temples, or other religious groups are taxed. In comparison, those sent by individuals or businesses to non-profit organizations, hospitals, and other organizations are received at a deduction. Donations to big organizations like United Way, the American Cancer Society, or the American Red Cross are not tax-free.

What's a Business Play in Tax Deductible?

Businesses are interested in altering the outcome of an election to favor their growth. So, they get financially involved in the landscape. However, the IRS law on political denotations is clear. It clearly states that these donations are not tax-deductible. It further specifies that any amount paid or incurred for election reasons cannot be claimed as business deductions. 

This rule holds even for political candidates. They are not allowed to deduct their expenses while campaigning for an office. It states that donations or expenses made by a candidate during the campaign are not tax-deductible. These expenses include transport fares, registration fees, legal fees, advertising, etc.



Jim McClaflin, EA, NTPI Fellow, CTRC
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