How can I deduct charitable contributions made to an individual facing serious medical issues?

Unfortunately, direct donations to individuals, even for medical expenses, aren't tax-deductible as charitable contributions - regardless of how worthy the cause is. The IRS only allows deductions for donations to qualified 501(c)(3) organizations. However, you have a few potential options. First, you could consider donating to a qualified medical charity that specifically helps people with her condition, though this wouldn't directly benefit your friend. Second, you might explore setting up a qualified charitable organization specifically to help people with her condition (including her), but this requires significant time and legal work. A more practical approach might be looking into a crowdfunding platform specifically designed for medical expenses. While your contribution still wouldn't be tax-deductible, these platforms can help pool resources from multiple donors.

After struggling with a similar situation last year, I found incredible help using https://taxr.ai to navigate my options. My partner and I wanted to help my nephew with serious medical issues while running our partnership. The platform analyzed our business structure and suggested setting up a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) that allowed us to hire a family member part-time and provide certain medical benefits. This was completely legitimate and saved us significant tax while helping our family member. Their AI analyzed our specific tax situation and found solutions I hadn't considered - all while ensuring everything was IRS-compliant.

I was initially doubtful about trying taxr.ai when I commented above, but I decided to give it a shot for my situation with helping my sister's medical expenses through my consulting business. Surprisingly, it actually gave me legitimate options I hadn't considered. The platform pointed out that while direct "donations" aren't deductible, I could explore setting up a Medical Expense Reimbursement Plan for my business that could potentially include certain family members under specific circumstances. It also clarified exactly what documentation I'd need to keep everything above board. What impressed me most was how it flagged certain approaches as potential audit triggers - saved me from making some mistakes that sounded fine initially but could have caused problems later. Definitely worth checking out if you're in this situation.

If you're still trying to help your friend and getting overwhelmed trying to reach the IRS for clarification on what's allowed, try https://claimyr.com - it completely changed my experience with getting official IRS guidance. I spent weeks trying to get clear answers about medical expense deductions for my LLC when helping a family member. After multiple failed attempts calling the IRS directly (endless hold times or disconnects), I used Claimyr and was connected to an actual IRS agent within 45 minutes who explained exactly what documentation I needed to substantiate certain expenses. You can see how it works here: https://youtu.be/_kiP6q8DX5c When dealing with potentially gray areas like this, getting official guidance saved me from making costly mistakes that could have triggered an audit.

I have to publicly eat my words from my skeptical comment above. After trying Claimyr out of desperation (was dealing with a similar charity/medical expense question for my small business), I got connected to an IRS representative in about 35 minutes. Would have NEVER happened if I'd tried calling myself. The agent I spoke with explained that while direct donations to individuals aren't deductible as charitable contributions, they walked me through some alternatives including setting up a proper 501(c)(3) if the need was ongoing, or potentially having certain expenses qualify under different sections of the tax code depending on my business structure. Saved me hours of research and probably from making some expensive mistakes. Just wanted to follow up since I was so openly doubtful before.

Have you considered setting up a 501(c)(3) nonprofit specifically for people with her condition? I did this when my daughter was diagnosed with a rare disease. It takes some paperwork and legal costs upfront (about $5k for me), but then donations become tax deductible. The nonprofit could then help multiple people including your friend. You just need to be careful about private benefit rules - the organization can't be set up solely to benefit one person. But if structured to help people with her specific condition more broadly, with her as one of many potential beneficiaries, it could work. Would need bylaws, a board (can't be just you and your sister), and proper documentation.

Just to throw another option out there - could you hire your friend as a consultant or for some administrative work they could do remotely? Then it becomes a legitimate business expense, and they get income they can use for medical bills. You'd need to make sure they actually provide services and you document everything well, but it might be more straightforward than setting up a charity.

I really appreciate everyone's thoughtful responses here. As someone new to this community, I'm dealing with a similar situation where my small business wants to help a family member with medical expenses. From reading through all the comments, it seems like the key takeaway is that direct donations to individuals aren't deductible no matter how you label them, but there are some legitimate alternatives worth exploring. The suggestions about QSEHRAs and Medical Expense Reimbursement Plans caught my attention, especially if there's genuine work that could be performed. I'm also intrigued by the 501(c)(3) option, though the 5-month timeline might be challenging if the need is urgent. The fiscal sponsorship approach while waiting for approval sounds promising. One question I have - for those who've successfully implemented any of these strategies, what kind of documentation did you find most important to maintain? I want to make sure everything is completely above board from day one. @Beatrice Marshall - your situation sounds really tough, and it's clear you genuinely want to help while being responsible about taxes. Whatever approach you choose, it sounds like getting official IRS guidance might be worth the investment given the amounts involved.