Question

The city of Lawrence recently was hit by a tornado, leaving many families in need of food, clothing, shelter, and other necessities. Betty contributed $500 to a family whose home was completely destroyed by the tornado. Jack contributed $700 to the family’s church, which gave the money to the family. Discuss the deductibility of these contributions.

 

 

Answer 1

Deduction for Charitable contributions

Deductibility of Charitable contributions depends on various factors like whether the contribution is made to a qualified organization or to an individual or a foreign organization. Only the contributions made to organizations setup in the US and recognized by the IRS are qualified for charitable deductions. However gifts or donations made directly to needy individuals are not deductible as they are not qualified organizations.

 

In this case, B’s contribution of $500, given directly to the family whose home was destroyed in the tornado, is not deductible as charitable contribution, since it is made to an individual and not a qualified organization. However J’s contribution of $700, to the family’s church which gave the money to the family, is deductible for charitable contribution as the church is a qualified charitable/ religious organization based in US.

Deduction for Charitable contributions

Deductibility of Charitable contributions depends on various factors like whether the contribution is made to a qualified organization or to an individual or a foreign organization.