Question: Lisa wants to complete a qualified charitable distribution (QCD) from her traditional IRA. If she contributes the money to a 501(c)3 education fund, she will receive a state tax credit of 50%. If she completes this transaction, will this reduce her federal charitable deduction amount? Does this transaction require the tax-free QCD to be reduced because of the state tax credit?

Answer: The qualified charitable distribution does not qualify as a federal charitable deduction on Form 1040 Schedule A. Under §408(d)(8), the qualified charitable distribution allows the taxable income distribution from her traditional IRA to be tax-free because the money is donated to a charity. She will not receive a federal charitable deduction for this donation because this would be considered a double deduction.

No reduction to the tax-free QCD is required. Under §170, the state tax credit was not given by the charity, so this is not a quid pro quo scenario requiring reduction of the tax-free amount for the QCD.

The Tuesday after Cyber Monday (the Monday after Thanksgiving) has been deemed “Giving Tuesday,” a day promoting making donations to nonprofit organizations - monetary or otherwise.

If your clients are participating in Giving Tuesday, it’s important they know what sorts of records they need to keep in order to receive a deduction. The IRS has a tool that may help them make sure their donations are as beneficial as possible.

Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for tax-exempt charities, which allows taxpayers to determine if their donations are tax-deductible charitable contributions.

Here are some things to know about the TEOS tool:

• It provides information about the organization’s federal tax status and filings.
• It’s mobile friendly.
• Donors can use it to confirm the organization is tax-expempt and eligible to receive tax-deductible charitable contributions.
• Users can find out if an organization had its tax-exempt status revoked.
• Organizations are listed under their legal name on file with the IRS.
• Search results are sortable by name, EIN, state and country.
• Users can download entire lists of organizations eligible to receive deductible contributions.

Taxpayers can also use the Can I Deduct my Charitable Contributions? tool.

If your client does make a monetary contribution, they will need a receipt from the organization. All other donations will need to have a fair market value assessment of items donated.

Question: Helen Nelson decided to run for a political office in her local community. For her campaign, she incurred the following expenses totaling $1,570 that she personally paid: $930 printing, yard signs $260, and $380 postage and mailings. Are these allowable deductions on her tax return?

Answer: No. The campaign expenses are not allowable deductions on Helen’s tax return. Taxpayers are normally allowed a deduction for ordinary and necessary business expenses. However, such political expenditures are generally not deductible as trade or business expenses. Under §162(e)(1)(B), no deduction is allowed for political expenditures and lobbying expenses, including amounts paid or incurred in connection with any political campaign on behalf of (or in opposition to) any candidate for public office. Under Reg. §1.276-1(f)(2), a political candidate is a person who, at the time of the event or publication with respect to which the deduction is being sought, has been selected or nominated by a political party for any elective office. It also includes an individual who is generally believed, under the facts and circumstances at the time of the event or publication, by the persons making expenditures in connection therewith to be an individual who is or who in the reasonably foreseeable future will be seeking selection, nomination, or election to any public office.