Tax Implications of Making a Charitable Donation on Someone's Behalf

There are a number of reasons why you may wish to make a charitable donation in the name of another person. In some cases, donating in someone's name is a way to honor a deceased loved one's memory. Making a donation on behalf of someone is also a great gift idea for that person who has everything. If you choose to make a charitable donation in someone's name, you may still be entitled to deduct the donation on your tax return.

Although many gifts or donations may appear to qualify as a "charitable donation," the IRS has very specific rules regarding what is considered a qualified organization for the purpose of claiming a charitable donation deduction. Although not an exhaustive list, common examples of qualified organizations include religious organizations and federal state and local government as well as schools, hospitals and organizations such as the United Way or Salvation Army. Before deciding to make a charitable donation in someone's name, you may wish to be sure the donation is actually deductible.

Once you have decided to make a charitable donation, and verified that the organization qualifies, you need to be sure that you obtain proof of the value of the donation. In many cases, proof is established by a canceled check or bank statement. If you make your donation in cash, be sure to request a receipt showing the amount of the donation. Non-cash donations such as property, clothing or stocks are usually valued at the current market value of the item, not what you actually paid for the item. For donations with a value of $250 or more, you must obtain a written communication from the organization indicating the value of the donation as well as whether you received anything for the donation.

The IRS rules do not directly address making a donation in the name of another person. The rules do, however, make it very clear that the person claiming the deduction based on the donation must have proof of the value of the donation. In most cases, if you make a donation on behalf of another person, the donation is paid with funds from your bank account and therefore the proof is in your name. If you wish the person for whom you are donating the money to be able to claim the deduction, then the receipt or proof of donation must be out in the person's name.

If your total donations for the year are less than $500, you may claim the deduction by itemizing your deductions on Schedule A. If your total charitable donations for the year are over $500, then you must complete and attach IRS Form 8283 to your tax return (see Resources).