Facebook Donations 101: Are Facebook Donations Tax Deductible?
People have managed to seek donations for organizations that support causes dear to their hearts, thanks to the social media platforms' approximately 2.74 billion monthly users. Facebook even encourages its users to plan birthday fundraising events. With birthday fundraisers displayed on their Facebook pages and in their friends' news feeds, raising money for charity becomes a breeze.
The ease of use on both the fundraiser's and the donor's end compels many individuals to make charitable donations that they would not have done it otherwise. People can also arrange fundraisers for personal reasons, such as paying medical bills or endorsing a political cause. Facebook users have donated billions of dollars to nonprofit organizations, and millions more are added daily. Many wonder whether donations made through Facebook are tax-deductible or not
However, the fact that you're making the donation via Facebook doesn't mean that it's not tax-deductible. Although tax regulations vary from state to state, there is a strong probability that your most recent Facebook donation can be deducted from your upcoming income tax return.
Are Facebook Donations Tax Deductible?
Let's take a closer look at Facebook fundraising donations, tax deductions, and the impact they have on your tax return in general.
Donations made through Facebook, like those donated through other channels, are tax-deductible. These are called "cash donations," and their deductibility is determined in the same way that a donor writes a year-end check to your nonprofit. Donors must provide a bank statement or other written proof of the donation in order to claim a tax deduction on Facebook donations. The following must be included in this proof:
- Nonprofit organization's name
- The amount of donated money
- A statement indicating your organization did not provide any goods or services in exchange for the donation (if goods or services were provided, such as during an online auction, this is handled differently).
Are Donations to Personal Facebook Fundraisers Tax Deductible?
No. Personal Facebook fundraising contributions are not eligible for tax deductions.
Let’s consider the example of Curtis. Curtis begins a personal fundraiser to help a friend who lost his job due to the pandemic. Donors will not be allowed to write off their charitable contributions from their taxes because the money will go straight to their friends instead of a charity organization.
How To Find Donations Made Through Facebook?
If you donated, you'd receive a confirmation email to the primary email provided on your Facebook profile. The email receipt confirms that you made this payment as a charitable contribution with no expectation of receiving goods or services in return. Please consult a tax professional about the deductibility of your donation since tax regulations differ by state, country, and area.
How Can I Know If My Charity Donations Are Tax-Deductible?
Your donation contributions only to certain types of organizations make you eligible for 501c3 write-offs. The IRS has recognized these nonprofits as charitable organizations. The charity should state clearly what type of IRS organization it is and whether donations made to them are tax-deductible. If you still remain sure, the IRS has a helpful online tool. You can use the Exempt Organizations Select Check search engine to look for organizations and learn more about their status.
However, you should know that not all organizations are not included, and some use "doing business as" identities, which means they operate under a name that is not their legal, registered one. In this situation, searching for their legal name may provide no results.
Are Facebook Donations Made To Political Causes Tax Deductible?
No, donations to political campaigns on Facebook are not tax-deductible. So, if you're one of the many people who donate to political campaigns, don't expect to be able to deduct any of your contributions on your tax return. Likewise, the same applies to a business return. In the majority of instances, political contributions are not regarded as legitimate business expenses and are therefore nondeductible.
How Much Can You Claim As a Tax Deduction on Donation Made Through Facebook?
You can claim the entire amount of money donated on your tax return if your donation is $2 or more and made to a deductible donation recipient charity. Section D9 of your tax return (Donations and Gifts) specifically deals with charity donations, so you should report your donations there.
Does Facebook take a cut of charitable donations?
Processing Facebook donations come with a cost—roughly 5% for nonprofits in the United States. Approximately 2% of that goes to administrative fees, while the remaining 3% goes into payment processing.
As long as you donate 2$ or more to a charity organization through Facebook, you can even claim 100% of your donations made through Facebook on your tax return. However, in order to do that, you should have a bank statement or other written proof that has all the necessary information about your donation.