Deductibility of Contributions Made to PTAs
PTA members and contributors often assume that any payment they make to a PTA in conjunction with a fundraising event is tax-deductible. However, rules and limitations exist for the deductibility of such payments.
Quid Pro Quo Contributions
IRS regulations state that charities must provide a written disclosure statement to a donor for a quid pro quo contribution of more than $75. This type of contribution is a payment made partly as a contribution and partly in exchange for goods and/or services. The disclosure statement must disclose the amount of the payment and give a description and good faith estimate of the value of the goods and/or services received in exchange for a portion of the payment.
Example: If a PTA holds a fundraising event that provides a meal or some tangible item in return for the purchase of a ticket, then the portion of the ticket that is tax-deductible is the ticket price less the fair market value of the meal or item received.
Charitable Contributions of Cash
A donor claiming a monetary charitable contribution deduction of any amount cannot take the income tax deduction unless he or she has a canceled check, bank record or acknowledgment from the charitable organization. The acknowledgment correspondence must:
- Include the name of the charitable association (name of PTA)
- Include the amount of money received
- Include date of the contribution
- State whether any goods or services were received in return for the contribution
- Describe the goods or services received, with the fair market value of same
- Be received by the donor prior to the due date of the donor’s tax return
Out-of-pocket volunteer expenses can qualify for a charitable deduction but are subject to the same substantiation requirements if the expenses exceed the $250 threshold. The volunteer must maintain records to substantiate the amount of the expenses, and obtain a statement from the association describing the service provided by the volunteer and indicating whether or not any goods or services were provided to the volunteer in return.
An acknowledgment to substantiate charitable contributions and a disclosure statement for quid pro quo contributions are two separate documents. If a PTA decides to make them one document, the PTA must follow all the rules and deadlines in order to avoid applicable penalties. Charities that fail to provide the required disclosure statements for quid pro quo contributions of more than $75 will incur a penalty of $10 per contribution, not to exceed $5,000 per fundraising event or mailing.