My five year old daughter negotiated $20 in back allowance (we hadn't paid her allowance in a while, and she's a better negotiator than me) and then donated that money at her school to a charity for sick children. Assuming the charity is qualified, do I deduct the contribution from my own taxable income? Or is the allowance payment considered a gift or income to her, and so she would deduct it on her own tax return if she had one?
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14Your daughter can successfully negotiate for back allowance that she then donates to charity? Are you sure she's only five years old?– JABCommented Mar 22, 2016 at 17:20
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10Well, she's almost 6.– stanniusCommented Mar 22, 2016 at 17:29
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1Seems like a lot of work to save a couple of dollars (at most) on your taxes.– KevinCommented Mar 22, 2016 at 18:37
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1Note that if you own a home based business, and your child's chores include helping with the business in some way, you may be able to deduct some or all of the allowance as wages.– Dan HendersonCommented Mar 22, 2016 at 20:01
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1@Kevin Ordinarily I'd say that it's a good way for a parent to introduce the concept of a tax return but it might be a bit much for a five-year-old.– LilienthalCommented Mar 22, 2016 at 20:29
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2 Answers
No, you may not deduct the charitable contributions of your children. The Nest covers this in detail:
The IRS only allows you to deduct charitable contributions that you personally funded, whether the contribution was made in your name or in someone else's. If your child or dependent makes a donation to a charity, you are not allowed to claim it as a tax deduction. This is true even if your dependent does not claim the contribution on his own tax return because he opts for the standard deduction rather than itemizing or claims exemption.
Now, had you constructed the transaction differently, it's possible you could've made the contribution in your child's name and thus claimed the deduction. Allowance is technically a gift, and if she agrees to forgo allowance in exchange for you making a contribution, well, the IRS can't really complain (though they might try if it were a large amount!). Contributions in the name of someone else, but funded by yourself, are deductible:
[Y]ou can deduct contributions you make in someone else’s name. So if you donated a certain amount of money to XYZ charity in your child’s name, for example, you would be able to deduct this amount on your taxes, as long as the deduction requirements are met. You will need to keep accurate records of the payment along with the receipt from the organization to prove you financed the donation.
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6You could apply the second part of this advice and make a matching contribution yourself, in your daughter's name. This second contribution would be deductible, of course, but more importantly you'd be supporting her choice to donate. And once she's old enough to learn about taxes, you can pull this out as an example of how accounting choices that might seem to have an equivalent outcome can have very different tax implications. Commented Mar 22, 2016 at 19:43
With the new tax code of 2018 we have
For contributions of cash, check or other monetary gift (regardless of amount), you must maintain a record of the contribution:
A bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution.
i.e. all cash amounts must be documented from the charity. I'd ask you in return, did the school issue proper receipts?
answered Mar 30, 2019 at 17:03
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+1, but I think the change predates the 2018 tax reform. I think this change was made during the Obama Administration. Commented Mar 30, 2019 at 23:02
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One of those little things that I don’t recall when added to tax code. For me, Salvation Army bell ringer was one of a handful of cash donations. If audited, about 1% of my claimed donations will be disallowed. Commented Mar 30, 2019 at 23:24
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1Below $250 it's actually a bank record (i.e. checking or credit card payment) or receipt from the charity or (omitted from the online 'topic') employer documentation of payroll deduction (but schoolchild is presumably not employed). And this dates back at least to 2007, which is the oldest pub 526 I saved a downloaded copy of. AFAIK the only charity change for 2018 was increasing the yearly limit (excluding some special cases) to 60% AGI from 50%. Plus of course increasing standard deduction which is expected to discourage/reduce itemizing in the first place. Commented Mar 31, 2019 at 19:52