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Some "Donations" Aren’t Tax Deductible

Some "Donations" Aren’t Tax Deductible

Preparing for Taxes

Some “Donations” Aren’t Tax Deductible

Say you attend a charity fundraiser and bid on an item you want. If you are the winning bidder, and the price you paid for the item was donated to the charity, the charity obviously benefits, but you may not be able to take a tax deduction for the purchase. Generally speaking, when you receive something of value in return for a donation, you have not made a charitable deduction. The person or business that donated the item to the auction has, however.

If you pay fair market value for the item, you receive no deduction. (But you can feel good about helping out the charity.) The only way you can take a deduction is if you pay more than market value; then you can deduct the difference, since that is considered to be a donation to the charity.

So if you pay $50 for a massage, you purchased a massage, helping the charity but not earning a tax deduction.

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