Donations to Individuals and Families: Generous, Yes, Tax-Deductible, No

People often ask about making donations to support individuals or families victimized by a tragedy, medical emergency, or natural disaster, and are surprised to learn that gifts earmarked for specific individuals are not tax deductible as charitable contributions. The basic rule set forth under the Internal Revenue Code and confirmed by court decisions is that a tax deduction is allowed for contributions made “to or for the use of” qualified Section 501(c)(3) organizations, but NOT for contributions to specific individuals (those payments are treated as private gifts and do not qualify as deductible contributions). Similarly, donors wanting to help someone in need cannot indirectly obtain a charitable gift tax deduction by designating a gift for a particular individual and passing the gift through a 501(c)(3) organization. This prohibited practice is known as “earmarking.” This is not meant to dampen your philanthropic spirit or willingness to help those in need, but rather to help you understand under what does (and does not) count as a tax-deductible gift to charity.