Donating on Behalf of Someone Else: Who Gets the Tax Benefit?
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If you donate to a qualified charity in someone else’s name—say as a gift or in honor of them—you might wonder who can claim the tax benefit. The answer is simple— you, the donor, are the one entitled to the deduction. The IRS ties deductions to the individual who actually parts with the money, not whose name appears on the acknowledgment letter.
With that cleared up, let’s look at how charitable deductions work in general. Understanding how these deductions work is key to ensuring your generosity also brings tax savings. From knowing which organizations qualify to understanding percentage limits tied to your income, the process requires a little planning.
Who Can Claim the Deduction?
You can only claim charitable contribution deductions if you itemize deductions on Schedule A of Form 1040. This means that those who take the standard deduction won’t be able to reduce their taxable income through charitable donations.
Only donations to qualified organizations are deductible. These generally include recognized nonprofits, religious institutions, educational institutions and government entities. Donations to individuals, political organizations or foreign charities usually do not qualify.
What Counts as a Deductible Donation
Donations can be made in cash or property. Cash donations are the most straightforward and are usually capped at 60% of your adjusted gross income (AGI). For non-cash contributions such as real estate, securities, or art, deductions are based on the fair market value of the asset at the time of the donation. In these cases, limits drop to 30% or even 20% of AGI depending on the type of property and organization.
Business owners donating food inventory to qualified charities face a different rule: deductions are limited to 15% of their net income from the business. This ensures donations meet both IRS requirements and food safety laws.
Importantly, while donating your time, services, or even blood may be a generous act, none of these are deductible.
How to Keep Records That Matter
The IRS places strong emphasis on documentation. To deduct your contribution, you must have proof of the donation in the tax year it was made. For cash gifts, a bank record or receipt from the charity is sufficient. For property donations, a written acknowledgment from the receiving organization is required, often with a description and fair market value of the item.
If your total donation to one organization exceeds $75 and you received something in return—say, dinner at a fundraising gala—the charity must provide a statement breaking down the deductible portion of your gift.
Limits and Carryovers
Most people run into the 60% AGI cap for cash gifts. If your contributions exceed annual limits, the IRS allows you to carry them forward for up to five years. After that, any unused deductions expire.
During the COVID-19 pandemic, Congress temporarily allowed cash contributions up to 100% of AGI, but starting in 2022, the standard 60% cap returned.
The Bottom Line
Charitable contribution deductions can help you lower your taxable income while supporting causes you value, but they come with strict IRS guidelines. You’ll need to itemize your return, donate to qualified organizations and keep detailed records.
With careful planning—whether by donating cash, property, or through a donor-advised fund—you can make your generosity go further, both for the charities you support and your own financial health.