Is it fraud to claim tax deductions for charitable donations collected from others?
I'm planning to organize a charitable donation of $1,300 to a local nonprofit next month. My situation is that I've already collected about $1,050 from my extended family and some neighbors who wanted to contribute but specifically mentioned they don't care about getting tax deduction letters. I'd be putting in the remaining $250 myself using my personal credit card for the entire donation. The charity would obviously give me a receipt for the full $1,300 donation. My question is about the legality of claiming the entire amount as a tax deduction. My accountant friend says this would be illegal and that I can only deduct the $250 I personally contributed from my own funds. But another family member insists it's fine since I'm the one physically making the payment. I strongly suspect this would be considered fraudulent by the IRS, but wanted to confirm. Are there any circumstances where claiming the full amount would be legitimate? Or is it definitely limited to just the portion that came from my personal funds? I don't want to do anything improper but would like to understand the rules correctly.
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Brooklyn Foley
You're right to be concerned. This would indeed be considered tax fraud. You can only claim a deduction for charitable contributions that you personally made using your own funds. When you collect money from others and then donate it, you're essentially acting as an intermediary or conduit - the money isn't yours to begin with, so you can't claim it as your personal charitable donation. The IRS is very clear about this: you must be the actual donor to claim the deduction. If you were audited and the IRS discovered you claimed donations made with other people's money, you could face penalties and interest on the unpaid taxes.
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Jay Lincoln
•But what if the family members explicitly gave the money to me as a gift first, with no strings attached, and then I later decided to donate it? Would that change the situation at all?
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Brooklyn Foley
•If the money was truly given to you as a gift with no strings attached or expectation of how it would be used, and then you independently decided to donate it, that might be a different situation. The key is whether you had complete control and ownership of the funds before making the donation decision. However, based on your description, it sounds like the money was collected specifically for the charitable donation, not given to you as unrestricted gifts. When people give you money expressly for donating to a specific charity, you're acting as a conduit, and claiming the deduction would be improper.
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Jessica Suarez
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Marcus Williams
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Lily Young
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Jessica Suarez
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Lily Young
I actually tried taxr.ai after seeing it mentioned here, and I'm genuinely impressed! I was dealing with a mix of personal and workplace-organized charitable donations and wasn't sure what I could claim. The service immediately identified which portions were deductible and which weren't. It even flagged that one of my "charitable" donations was actually to a political organization (not tax-deductible) that I had mistakenly categorized wrong. Seriously saved me from a potential audit headache and gave me the confidence that I'm filing correctly.
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Grace Thomas
Just to add some clarity here - as a volunteer tax preparer, I've seen this issue come up repeatedly. The legal principle is that you can only deduct what you sacrifice. If friends give you $1,050 specifically to donate, you're not sacrificing that money - they are. But they've chosen not to claim the deduction. The tax court has consistently ruled that the substance of a transaction matters more than its form. So even if you technically run all the money through your account, the IRS looks at where the money actually came from when determining who's entitled to the deduction.
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Hunter Brighton
•What about if someone gives you money for your birthday with no strings attached, and you choose to donate it? Can you claim that as a deduction since it legally became your money as a gift first?
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Grace Thomas
•That's actually a good question with a clearer answer. If someone gives you money as a true gift (birthday, graduation, etc.) with absolutely no strings attached, and that money becomes fully yours, then you can indeed claim a deduction if you later choose to donate it to charity. The key distinction is that the money must truly become yours with no expectation or requirement that you donate it. It's about having complete dominion and control over the funds before making your own independent decision to donate.
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Dylan Baskin
Has anyone actually been audited for something like this? I wonder how the IRS would even know the difference between money that was yours versus money others gave you to donate.
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Lauren Wood
•They might not know in many cases, but if you're audited and they ask for bank statements, they could see large deposits right before the donation that might raise questions. Especially if those deposits came from multiple sources. My cousin got caught this way when she claimed a $5k church donation that was actually collected from several family members.
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Amina Diop
I appreciate everyone sharing their experiences and advice here. As someone who's been in a similar situation, I can confirm that the consensus is correct - you can only deduct what you personally contributed from your own funds. The IRS Publication 526 is very clear about this: "You cannot deduct contributions made by others." Even if you're the one physically making the donation or using your credit card, if the money originated from other people specifically for that charitable purpose, those amounts aren't deductible by you. In your case, you'd only be able to deduct the $250 that came from your personal funds. The $1,050 collected from family and neighbors cannot be included in your deduction, regardless of their stated lack of interest in claiming it themselves. The fact that they don't want the deduction doesn't transfer that right to you. Your accountant friend is giving you sound advice. It's always better to be conservative with tax matters than risk potential penalties and interest from the IRS later.
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