Many political campaigns, especially those with minimal budgets, rely on donations and contributions from their constituents. This is a way for candidates to receive financial aid and gauge their level of public support.
For everyday citizens like us, donations are among the few ways we can help shape America’s political landscape. Some may find the need to not only exercise their civic duty to vote in area elections but to also financially-back candidates to extend their political participation as well.
However, when tax season sets in, many taxpayers wonder: are political contributions tax deductible?
In this article, we’ll explain the many tax implications of political donations, tax deductible tips you can use, and more.
In a nutshell, the quick answer to the question “Are political contributions deductible?” is no. Any money voluntarily given to candidates, campaign committees, lobbying groups, and other political organizations is non-deductible as per the IRS.
The IRS guidelines also go beyond just direct political contributions. Tax-deductible rules also state that expenses incurred while volunteering for a political campaign or organization cannot lower your tax liability. For example, suppose you volunteered for the campaign committee of your local mayoral candidate. In that case, the money you spent on food and transportation is not tax-deductible. You cannot declare that time as an hourly paid service for tax purposes, either.
Even the candidates themselves are not immune to this rule. That means they can’t deduct expenses incurred for their campaigns, even if those expenses were paid out of their own pockets.
However, there’s one way to make a tax-free political contribution, specifically to the presidential election campaign. 1040 forms will have a “Presidential Election Campaign” option you can tick. It authorizes the IRS to donate $1 of your income tax payment to the presidential campaign fund, which is then given to qualified presidential candidates. Because the $1 comes from the tax that you paid, it costs you nothing to donate. Nor does it affect your taxes or deductions in any way. Of course, the drawback is that you aren’t directly contributing to your chosen presidential candidate but to all qualified candidates.
Are campaign contributions tax-deductible? People usually confuse these contributions with charitable donations. Funds given to charity are tax-deductible, unlike political contributions. Deductible contributions only apply to charitable organizations, but political parties do not qualify for this designation. The IRS singles out political parties or any other politically motivated organization as exceptions to the rule. However, it can be difficult to determine which ones qualify for tax deductions. To help taxpayers out, the IRS created the Tax Exempt Organization Search portal. You can use the tool to search for the specific organization you want to donate to via their Employer Identification Number and see if they qualify for tax deductions.
For example, to the question, “Is ActBlue tax-deductible?” — the answer is a definite yes. This is because ActBlue serves as a charitable nonprofit organization that funnels funds to democratic campaigns as opposed to a direct donation to the candidates themselves.
Because of this IRS rule, it’s vital to keep track of multiple contributions so you know which ones are and aren’t tax-deductible. It makes your life easier when completing your annual tax returns, and it minimizes any filing errors.
In many ways, big businesses financially influence politics in their favor because they have more to gain. So, it’s no wonder they often make political donations. But just like the rule for individual contributions, they cannot use any of these expenditures as tax deductions.
In addition, businesses also spend large sums trying to influence legislation through other means aside from directly supporting candidates. These can include funding lobbyists, labor unions, and chambers of commerce. As expected, these expenses are non-deductible as well.
So, are campaign donations tax-deductible? No. However, you can still gain tax savings outside of political contributions, including in the following ways:
As experienced Chicago tax accountants and advisors, Porte Brown can help you navigate the U.S. tax system. We’ll help you make the most of your filings, so you can support causes that matter to you. Contact us today to learn more.
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