June 30, 2020 11:06 pm

Donations to a Needy Person Aren’t Deductible

For 2020, whether you itemize or claim the standard deduction, you can take a charitable contribution deduction (subject to limitations). This write off applies only to donations to IRS-approved charities. The Tax Court made it clear that it does not apply to donations made directly to an individual, no matter how needy. In a recent case, a taxpayer deducted as charitable contributions $5,320 in one year and $5,420 in the next year for gifts he gave to his sister in Mexico who was ill. The court didn’t allow the deductions because they were not gifts to a recognized charity (Jose A. Serrano, TC Summary Opinion 2020-15).

Note: You can check on whether a charity is approved to receive tax-deductible contributions at the IRS’ Tax Exempt Organization Search (https://apps.irs.gov/app/eos/).

Tax Glossary

Capital asset

Property subject to capital gain or loss treatment. Almost all assets you own are considered capital assets except for certain business assets or works you created.

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