Short answer: Yes, some donations to school district programs can be tax-deductible, but there’s more to know about properly claiming your donations on your taxes.
Longer answer: In the U.S., the IRS permits donors to claim tax deductions for donations they make to qualified school district programs, which don’t operate for profit and are solely supported by the state and the local government. When individuals complete their annual tax returns, they can include donations to school district programs as a deductible charitable contribution.
What amount is tax-deductible for all the donations to school district programs?
The tax-deductible amount is equal to the value of all cash and property that donors give to the school district programs. Federal law accepts the use of any reasonable valuation method for most property donations to schools, provided that process can assess a value similar to the price that any other willing buyer would pay for the same property on the open market.
For instance, if donors donate used pairs of shoes to a school, the IRS recommends that the donors refer to the price that a local thrift shop charges for similar pairs of shoes in comparable condition. However, suppose donors donate property that's not commonly sold to customers, such as sculptures and art pieces. In that case, they may need to consult an appraiser to determine the monetary worth of such items for tax purposes. Cash donations are also allowable deductions for tax purposes.
Volunteers are usually unable to deduct any tax amount for the time they spend volunteering for different school programs. However, they may be able to deduct mileage, parking, or other out-of-pocket expenses they incur while volunteering.
What if as a thank you the school system provides something in return for a donation made? It could mean that not all of the contribution is tax-deductible. Only the value of the donations in excess of the value of goods and services received as a result of the donations may be deductible for purposes of calculating Federal and State income taxes.
Keep in mind that tax laws are ever-changing, and while we provide the above guidance, we encourage school leaders to always recommend that when donors raise tax questions to encourage the donors to consult with a tax professional for deductibility of any and all contributions made. The school leaders should make clear to all donors that the School System does not accept responsibility erroneously or otherwise for improper application of charitable donations in personal or corporate tax filings.
The LeanStream Advantage
Your school system may not only have several donors, but each donor may make contributions to several programs and support organizations with your system. These could range from PTAs to Booster Clubs to helping an individual teacher raise money to fund a classroom aquarium. School systems that utilize LeanStream to help facilitate fundraising for their entire education family have the ability to automatically generate and send out, via email, tax letters for each donor. These tax letters lay out all donations made by a single donor regardless of which program, school, club, or organization that funds were contributed to. The letter also contains reminders to donors that they should consult a tax professional and that the school system does not accept responsibility for the improper account of contributions made by donors.
As a school leader, you can advise your donors that some donations to school district programs are tax-deductible while others are not. Also, tell them that there are donations that must first meet specific criteria, as stipulated by the IRS, before they can be eligible for income tax deductions. More importantly, always encourage donors to seek out professional guidance from legal/tax professionals regarding their questions concerning the deductibility of contributions.