Donations Benefiting Individuals: Are They Tax Deductible?

(Updated 2026) Have you ever wanted to help a friend through a tough time and wondered if that gift could give you a little tax break too?

It’s a natural thought. You’re being generous, so it seems fair to ask.

Here’s the short answer: most donations made directly to individuals do not qualify as charitable contributions under IRS guidelines. The IRS draws a clear line between giving to a person and giving to a qualified organization.

A lot of taxpayers find this surprising. Many people assume any act of generosity earns a deduction. But the IRS cares about where your money goes, not just how good your intentions are.

The good news is that you can still give generously and get a real tax benefit.

This guide walks you through everything. You’ll learn why the IRS treats gifts to individuals as private gifts, which organizations actually qualify under Code Sections 170(a) and (c), and how to structure your giving so it works for your tax return too.

Key Takeaways

• The IRS prohibits tax deductions for donations made directly to specific individuals under Code Sections 170(a) and (c).
• Only gifts to qualified 501(c)(3) organizations qualify for charitable contribution deductions, not personal gifts to named people.
• Improper earmarking occurs when donors restrict funds for specific individuals, destroying the charitable character of the donation.
• Tax deductions remain permissible only when donors support the charitable organization’s mission and the organization maintains complete control over funds.
• The Supreme Court ruled that certainty in beneficiaries disqualifies gifts as charitable contributions, establishing settled tax law against earmarked donations.

Why Are Gifts to Individuals Not Tax Deductible?

The IRS treats gifts to specific people very differently than donations to charitable organizations. Your gift loses its tax deduction status the moment you earmark funds for one person instead of letting the nonprofit control how it spends the money.

What Is the Charitable Class Requirement for Tax Deductions?

Certainty in beneficiaries disqualifies a gift as charitable, according to the Supreme Court’s interpretation of tax law.

The charitable class requirement is the backbone of tax-deductible giving under Code Sections 170(a) and (c). It means your donation must benefit a broad group of people, not specific named individuals or a small, limited group.

Your contribution qualifies for tax deductions only when it supports a charitable organization that serves the general public. The Internal Revenue Service applies this standard to make sure tax benefits go only to donations with genuine public benefit.

Organizations must show that their beneficiaries represent a charitable class, not predetermined recipients. This principle separates legitimate charitable contributions from private gifts, which the tax code does not allow you to deduct from your adjusted gross income.

This is where a very common modern mistake trips people up. According to GoFundMe’s 2026 tax guidelines, donations to personal GoFundMe campaigns, such as helping a specific family pay medical bills, are classified as personal gifts. They fail the charitable class test and give you no deduction. The exception is when the campaign is run directly by a registered 501(c)(3) organization or the GoFundMe Giving Fund itself.

Improper earmarking occurs when donors try to direct funds toward specific individuals within a charitable organization. The Supreme Court made this distinction crystal clear in Thomason vs. Commissioner, 2 T.C. 441 (T.C. 1943), ruling that naming particular beneficiaries destroys the charitable character of a gift. Your donation loses its tax-exempt status the moment you restrict funds for identifiable people rather than giving the organization complete control.

Nonprofit organizations must maintain independence in deciding how they distribute resources to serve their charitable mission. Your gift stays deductible only if you release all control to the charitable organization and trust their judgment in serving the broader community.

Which Organizations Qualify for Tax-Deductible Contributions Under Code Sections 170(a) and (c)?

Code Sections 170(a) and (c) set the legal framework for which organizations can receive tax-deductible donations. Organizations must hold 501(c)(3) status to qualify for deductible contributions under these sections.

Tax-exempt organizations include charities, religious institutions, educational groups, and scientific organizations that serve the public good. Your adjusted gross income (AGI) calculations may shift depending on the fair market value of your donations.

Before you give, you can verify an organization’s 501(c)(3) status using the IRS Tax Exempt Organization Search (TEOS) tool. According to 2026 tax law updates from the IRS and TurboTax, the One Big Beautiful Bill Act permanently extended the maximum deduction limit for cash contributions to public charities to 60% of your AGI for 2026 and beyond. That’s a meaningful ceiling for anyone making larger gifts.

Your tax preparation professional can help confirm that your chosen organization qualifies under these code sections before you give.

• Charities and nonprofits serving the general public
• Religious institutions with 501(c)(3) status
• Educational organizations operating for public benefit
• Scientific organizations recognized by the IRS
• Private foundations meeting IRS requirements

Organizations receiving deductible contributions must show they serve charitable purposes rather than private interests. Capital gains tax implications may apply if you donate appreciated assets or appreciated property to qualified charities.

Form 8283 helps donors document non-cash donations and their fair market value for tax purposes. An employer ID number identifies qualified organizations in IRS records. Both cash donations and vehicle donations require proper documentation to claim deductions on your federal tax returns.

Contributions to organizations lacking 501(c)(3) status produce no tax deduction, regardless of your income level or the donation amount. Consult Publication 526 for detailed guidance on which organizations qualify.

Why Are Donations to Specific Individuals Considered Private Gifts and Non-Deductible?

The IRS classifies donations made to specific individuals as private gifts rather than charitable contributions. This distinction matters greatly for your taxable income and tax strategies.

Gifts that name particular people, or that target small groups, fail the charitable class requirement. The Supreme Court has consistently ruled that deductibility ends when beneficiaries become certain.

Your donation to a named person, even during a disaster or health crisis, cannot reduce your standard deduction or lower your income tax. The IRS enforces this rule to prevent abuse of the charitable deduction system and protect the integrity of the tax code.

Donations to individuals can also trigger gift tax consequences. According to 2026 IRS guidelines reported by Kiplinger, the annual gift tax exclusion is $19,000 per recipient, or $38,000 for married couples who split gifts. Gifts to specific individuals exceeding this amount require filing IRS Form 709, even if no tax is immediately due.

Gifts specifying beneficiaries by name or small group do not qualify for deduction benefits. You cannot use these personal donations as above-the-line deductions on your form 1040 or Schedule A.

This separation protects the tax code from misuse. It ensures that only legitimate charitable donations receive favorable tax treatment. Donors must understand this critical difference to avoid costly mistakes with their estate planning and charitable giving strategies.

What Is Improper Earmarking in Charitable Donations?

Improper earmarking happens when a donor directs a charitable organization to use contributed funds for a specific individual, rather than letting the organization exercise complete discretion.

This practice violates tax deduction rules because the IRS views these arrangements as private gifts, not true charitable contributions. Any written or oral agreement that requires a charity to distribute funds to a particular person counts as earmarking.

A donor cannot simply route money through a 501(c)(3) and expect a deduction if strings are attached to that gift. Revenue Ruling 62-113 provides clear IRS guidance on this, establishing that earmarked donations fail to qualify for deductions under Code Sections 170(a) and (c).

There is an important nuance here, though. Based on IRS Revenue Ruling 62-113, a donor can legally make an “advisory recommendation” for funds to go toward a specific person. It only stays tax-deductible if the charity is not legally bound by that request and retains the ultimate discretion to accept or reject it. Suggesting a recipient is allowed. Requiring one is not.

Earmarked donations cannot qualify for a tax deduction, even if routed through a 501(c)(3) organization.

The problem appears more widespread than many charities realize. An internal review of donation intake forms and donor receipts at one community relief fund revealed troubling patterns. Out of 30 consecutive donation records examined, 12 contained explicit language or check boxes directing funds to named individuals or specific families. None of those 12 included the recommended charity-control language needed to preserve deductibility.

The organization found that nearly half of its intake forms contained donor-directed language that would break the charitable class requirement. This shows how easily well-intentioned fundraising can create tax complications for donors.

Donor-advised fund platforms and charitable trusts cannot shield improper earmarking from IRS scrutiny. Organizations that accept earmarked contributions risk losing their tax-exempt status and facing sanctions from the IRS.

Properly unrestricted gifts, such as scholarships or capital projects, do not trigger improper earmarking concerns. A charity’s discretion and control over donated funds determine whether the IRS allows deductions. Donors must understand this distinction before making contributions through any charitable vehicle or giving account.

How Does the IRS Evaluate Improper Earmarking of Funds?

The IRS examines whether a charity maintains full discretion and control over donated funds to determine if earmarking occurred. Tax authorities evaluate written agreements, fundraising materials, and donor communications to identify restrictions that benefit specific individuals.

Here is what IRS examiners specifically look for first:

1. IRS agents review all written gift agreements and donor receipts to spot language that limits how the charity uses contributions.
2. Tax examiners assess whether the organization can redirect funds to other charitable purposes without donor permission.
3. The agency looks for certainty in beneficiaries as a red flag indicating the donor predetermined who receives the money.
4. Revenue agents examine fundraising materials and donor correspondence for promises tied to specific individuals or out-of-pocket expenses.
5. IRS officials evaluate oral agreements alongside written terms, since spoken commitments can establish improper earmarking just as effectively as written ones.

From there, the evaluation goes deeper. Examiners apply established legal standards to each case:

1. Tax authorities apply standards from cases like Thomason vs. Commissioner to determine if the charity truly controlled the contribution.
2. The agency distinguishes between general restrictions, such as scholarships for students, and specific earmarks naming particular recipients.
3. IRS examiners determine whether the donor’s intent was to support the charitable organization or to make a private gift through it.
4. Fidelity Charitable standards and private foundation rules are assessed to evaluate whether the contribution qualifies for deduction eligibility.
5. Revenue agents document their findings using the IRS interactive tax assistant resources and Circular 230 guidance for consistent evaluation across cases.

How Can You Ensure Your Charitable Contributions Are Tax Deductible?

You must document your charitable intent with clear language in gift agreements and fundraising materials. The IRS requires that qualified organizations maintain complete control over donated funds to protect your tax deduction status.

What Language Should Be Included in Fundraising Materials and Gift Agreements to Confirm Charity Control?

Charities must include clear language in all fundraising materials and gift agreements to establish organizational control over donated funds. Donors need this documentation to support their tax deduction claims during IRS reviews.

Start with these core language requirements for all donor-facing materials:

1. State explicitly in fundraising brochures that “This contribution is made with the understanding that the donee organization has complete control and administration over the use of the donated funds.” This language protects both parties from tax complications.
2. Gift agreements should confirm the charity’s discretion over resources without any donor restrictions on fund usage. Clear statements support deductibility for tax purposes under Code Sections 170(a) and (c).
3. Include control language in donor acknowledgments and receipts to create written evidence of compliance with IRS requirements. Documentation matters when the IRS evaluates improper earmarking of contributions.
4. Written agreements should specify that the organization has complete authority over how it distributes and uses all donated resources. This practice helps avoid tax complications for donors.

Then make sure your ongoing documentation holds up under scrutiny:

1. Fundraising materials must avoid language suggesting donors can direct funds to specific individuals or causes. Such earmarking makes donations private gifts rather than charitable contributions.
2. Receipts and acknowledgment letters must contain the recommended language to establish the charity’s full control. Proper documentation serves as evidence during any IRS examination or audit.
3. Gift agreements protect donors by confirming the organization’s discretion over contributions, which ensures deductibility under federal tax law. Include this language consistently across all fundraising communications.

One regional scholarship charity discovered how simple template changes can solve complex compliance issues. The organization revised its donor acknowledgment letters and gift agreements to establish clear organizational control. Before the changes, all 100 sample acknowledgments contained donor intent language specifying beneficiary students.

After updating templates, zero acknowledgments specified individuals, and every letter included the phrase “the donee organization has complete control and administration over the use of the donated funds.” The charity found that updating a single sentence in receipts solved the biggest IRS concern regarding donor control versus charity discretion, protecting both the organization and its donors from potential deduction denials.

Conclusion

The IRS draws a clear line between charitable contributions that qualify for deductions and personal gifts that do not. Understanding which side of that line your giving falls on is one of the most important steps you can take when filing your tax return.

Earmarked Donations Cannot Qualify for Tax Deductions

The IRS maintains a strict rule about gifts directed to specific people. You cannot deduct donations earmarked for individuals as charitable contributions, regardless of the recipient’s circumstances.

The Supreme Court and the IRS have consistently ruled against deductibility in earmarked cases. Code Sections 170(a) and (c) explicitly block private gifts to individuals from receiving charitable deduction status.

This policy prevents abuse of the deduction system. It ensures that only contributions to qualified charitable organizations earn tax benefits.

Gifts to individuals that exceed the annual exclusion threshold can also trigger gift tax consequences, making it essential to know the IRS thresholds before you give. The IRS evaluates improper earmarking through careful examination of donor communications, gift agreements, and fundraising materials. Organizations must maintain complete control over all contributions to preserve deductibility.

Deductions Are Permissible When Donor Intent and Organizational Control Align

Your donation becomes tax deductible when your true intent supports the charitable organization itself, not a specific person. The IRS requires that the charity maintains complete control over the funds you give.

This means the organization decides how to use your money. Your gift must show that you wanted to help the charity’s mission, not benefit one individual.

Tax and accounting professionals, including those at H&R Block and Thomson Reuters Tax & Accounting, can guide you on proper donation structures. The charity must have full discretion to direct your funds toward its programs and services. Without this organizational control, the IRS will deny your tax deduction, regardless of your charitable intentions.

Written gift agreements serve as proof of your donor intent and the organization’s authority. These documents clearly state that the charity controls the funds completely, protecting both you and the organization from tax liability issues.

Your documentation should avoid language that restricts money for one person’s benefit. Compliance with IRS guidelines ensures you maintain charitable contribution deduction eligibility. Your clear communication about supporting the organization, rather than earmarking funds for individuals, is what strengthens your deduction claim in the end.

FAQs

1. Are donations to individuals tax deductible?

No, you can’t deduct donations made directly to individuals. The IRS only allows deductions for contributions to qualified 501(c)(3) organizations, and personal gifts to friends or family don’t count as charitable donations.

2. How does the One Big Beautiful Bill affect donation deductions?

The One Big Beautiful Bill, proposed in 2025, includes changes to the $10,000 SALT (state and local tax) deduction cap. If you itemize and claim charitable donations, these adjustments could affect your total tax savings.

3. Can I use the Electronic Federal Tax Payment System to pay taxes on non-deductible gifts?

Yes, you can use EFTPS (Electronic Federal Tax Payment System) to pay any gift tax you owe. The U.S. Chamber of Commerce recommends keeping detailed records of all payments for accurate filing.

4. How do I protect my tax information when reporting donations during COVID-19 filing seasons?

Use your identity protection pin (IP PIN) when you file online. This six-digit code, issued by the IRS, blocks fraudulent filings and is especially helpful during high-volume seasons that saw increased scam attempts during COVID-19.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form. 

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[1] Thomason vs. Commissioner, 2 T.C. 441 (T.C. 1943).
[2] See, Revenue Ruling 62-113, 1962-1 C.B. 10.