April 23, 2010 12:00 am

Gifts to Needy Individuals Aren’t Deductible Donations

Americans are kind-hearted people who reach out to those in need. Taxpayers who itemize their personal deductions can claim a write-off for charitable contributions. But not every example of generosity is deductible. Take a recent case where taxpayers who were members of a church made payments totaling $3,450 to individuals deemed by the church to be “Needy Saints.” They deducted the payments as charitable contributions, but the Tax Court disallowed them.

The law allows donations for contributions to organizations that have IRS approval to be tax-exempt and eligible to receive contributions. Money given directly to individuals for their personal benefits are deemed private gifts and are not deductible charitable contributions because they are not given to or for the use of a tax-exempt charitable organization.

Source: Jeffrey N. Wilkes; T.C. Summary Op. 2010-53
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Tax Glossary

Placed in service

The time when a depreciable asset is ready to be used. The date fixes the beginning of the depreciation period.

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