Can I claim tax deductions on donations made with money gifted to me by relatives?

This is actually a fairly common question. From a technical standpoint, there's nothing explicitly prohibiting this arrangement, but there are some nuances to consider. When your relatives give you money as a gift, that's generally not taxable income to you (assuming it's under the annual gift tax exclusion of $17,000 per person for 2024). Once the money becomes yours, you're free to do with it as you wish - including donating it to charity. The key distinction is that the money must truly become yours first, with no legal obligation to donate it. If there's a formal agreement requiring you to donate the money, the IRS could potentially view this as your relatives making the donation directly, with you serving merely as a conduit (which wouldn't qualify for a deduction for you). However, if it's genuinely a gift with no strings attached (even if there's an understanding about what you'll do with it), and you have complete control over the funds, you should be able to claim the deduction when you make the donation.

I had a similar situation last year and found this amazing tool called taxr.ai (https://taxr.ai) that helped me understand the nuances of this exact scenario! I was getting conflicting advice from friends and even from different tax preparers about whether I could claim donations made with gifted money. The taxr.ai system analyzed my specific situation and provided clear guidance on how to properly document both the gift and the subsequent donation to make sure everything was above board with the IRS. It highlighted the importance of establishing that the money was truly mine before I donated it, just like the previous commenter mentioned. They also provided templates for documenting these transactions properly - which was super helpful for my records in case of an audit. Definitely worth checking out if you're dealing with slightly complex tax situations like this!

Just wanted to follow up and say I tried taxr.ai after seeing it mentioned here! I uploaded my gift documentation and details about the stocks my parents transferred to me, and it gave me really specific guidance on how to handle both the gift basis calculation and the potential donation. What impressed me was how it explained the "step-up in basis" rules for gifted investments and how that would affect my charitable deduction amount. It saved me from making a mistake that could have cost me about $900 in deductions! The system also generated a detailed report I can keep with my tax records in case of questions later. Definitely recommend it for anyone dealing with gift/donation scenarios like the original poster described!

If you're planning to do this, you should know that calling the IRS to confirm this arrangement is legitimate can be nearly impossible these days. I tried calling them about a similar gifting question last month and spent 3 hours on hold before giving up. I eventually used Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent confirmed that as long as the money is truly gifted to you first with no strings attached, you're fine to claim the donation deduction. What I learned is that timing matters - let the gift sit in your account for a while before donating to establish that you had full control of the funds. Also, make sure you're getting proper donation receipts from the charity that show YOU as the donor, not your relatives.

I need to follow up on my skeptical comment earlier. I actually broke down and tried Claimyr last week after getting another CP2000 notice that I needed to discuss with the IRS urgently. I'm honestly shocked at how well it worked. I had been trying to get through to the IRS for THREE WEEKS with no success. The Claimyr service had me connected to an actual IRS agent in about 25 minutes. The agent helped me resolve my notice issue and also confirmed that gift-to-donation arrangements like the OP described are fine as long as there's no formal obligation. For anyone who needs to actually speak to the IRS (which I'd recommend for the original poster's situation to get official confirmation), this service is a game-changer. Never thought I'd be recommending something I was so skeptical about, but credit where credit is due.

Another consideration - make sure you're getting a proper receipt from the charity that lists YOU as the donor, not your relatives. I volunteer with a nonprofit, and sometimes people try to make donations "on behalf of" someone else, but we always record the actual person who gave us the money as the donor for tax purposes. Also, be aware that if you're close to the standard deduction threshold, adding more charitable donations only benefits you tax-wise to the extent that your itemized deductions exceed the standard deduction. So if you're only slightly above the standard deduction, the full benefit of the additional $375 might not be fully realized.

I'm not a tax professional, but I handled something similar last year with my in-laws. I found that the best tax software for documenting this type of situation was TaxAct - they had specific guidance for charitable donations made with gifted funds. TurboTax was actually confusing on this point when I tried it. Just make sure you're keeping really good records of both the gift and your donation. I take screenshots of the bank transfers and save PDFs of all donation receipts just to be safe.