DONATIONS TO PRIVATE SCHOOLS

By
Real Estate Sales Representative with Houlihan Lawrence
TAX LESSON ON DONATIONS TO PRIVATE SCHOOLS

You can deduct charitable donations made to qualified religious schools or colleges, but not all donations automatically qualify. Be careful if you are contributing money to a school that your child or grandchild attends.

Case in point: A married California couple paid to have their three children attend two private,

To qualify as a charitable contribution, the Tax Court stated, a gift must be made out of a "detached and disinterested generosity or out of affection, admiration, charity or like impulses."
   ? Sklar,TC Memo 2000-118
religious schools that combined traditional schooling with a religious education. Based on an allocation of the school day?s activities, they deducted 55 percent of the cost of the tuition as a charitable donation. The day consisted of 55 percent religious education and 45 percent secular education.

 

The IRS and the Tax Court denied the charitable deduction. "A tuition payment to a parochial school is generally not considered a charitable contribution because the taxpayer making the payment receives something of economic value . . . educational benefits, in return," according to the Tax Court. 

The Appeals Court agreed and noted that the couple failed to show that the nearly $24,000  in tuition payments they made exceeded the market value of a secular education (Sklar, CA-9, 1/29/02).

 Lesson to be learned: Keep your payments for education and charity separate and apart. Make sure you receive a detailed breakdown of payments from any school you give money to, especially if your child or grandchild attends classes there.

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