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Donations, “Un-donations”, and Taxes?

Started by BillD16 • 5 replies • 186 views

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BillD16 (Texas)
Posts: 971
Posted:
A few years ago, a neighbor donated ~$500 of stuff (think “Little Libraries”) to the neighborhood. Some of the stuff was never deployed. Yesterday the neighbor asked to get the undeployed items back.

I find myself wondering about the tax implications of this.

1. Are donations to an HOA tax deductible? I’ll have to check, but I’m fairly sure my HOA is not a 503(c).

2. If someone makes a donation, gets a tax deduction, and then later receives some or all of the donation back - they’d need to re-file their taxes, I think?

I don’t know if the neighbor claimed the donation on their taxes or not. If the HOA is not a registered charitable organization, I’m not certain how they’d even make such a claim. But I’ve seen tax matters discussed here - any thoughts? Any possible issues for the HOA?

BillD
HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”
MelissaP1 (Alabama)
Posts: 13,836
Posted:
HOA is not a charitable non profit. There is no tax deduction for donating to your HOA. Once you give something then it becomes HOA or common property of the owners.

I say give it back if no one wants it or has a need for it.
Former HOA President
BillH10 (Texas)
Posts: 1,217
Posted:
Bill, just give it back. Keep good notes in the association records, put the matter on the agenda for the next meeting of the BoD for approval, memorialize it in the meeting minutes and be done with it.

The tax implications vis a vis the donor are no concern, and, frankly, no business of the HOA. There is no risk to the HOA since the donations should not have affected its taxes.
AugustinD
Posts: 1,027
Posted:
Quote:
Posted By BillD16 on 10/25/2022 7:52 AM
1. Are donations to an HOA tax deductible? I’ll have to check, but I’m fairly sure my HOA is not a 503(c).
As you appear to suspect, and as is discussed here from time to time: Rarely does a HOA qualify as a charity for tax deduction purposes. If there is any question about whether your HOA qualifies, check at https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations
Quote:
2. If someone makes a donation, gets a tax deduction, and then later receives some or all of the donation back - they’d need to re-file their taxes, I think?
The original donation of goods to a qualifying charity (which rarely would be a HOA) counts as a deduction, if the taxpayer itemizes and meets various tests. But then the return of the donation (here, goods) has to be counted as income, most likely on the "other income" line of one's Form 1040. Caveat: We are talking about donation of goods here, and then receiving the goods back, right? Cash donations and donations of goods (to IRS-recognized charities yada) are treated somewhat differently. In recent years cash donations up to a a certain dollar amount may be deducted without itemizing. Yada off topic.

If you want a good, moderated forum for tax questions, ask. I have one to recommend.

TimB4 (Tennessee)
Posts: 21,059
Posted:
Bill,

A fair concern. However, the concern is not applicable to HOAs/COAs.

HOAs/COAs are typically incorporated as a not for profit corporation (IRS category 501(c)(4)

Charitable organizations that you can get tax deductions for are categorized by the IRS as 501(c)(3).

Therefore, as others have said, it's no issue returning the items.

Hope this helps,

Tim
BillD16 (Texas)
Posts: 971
Posted:
Quote:
Posted By BillH10 on 10/25/2022 8:09 AM

The tax implications vis a vis the donor are no concern, and, frankly, no business of the HOA. There is no risk to the HOA since the donations should not have affected its taxes.

Thanks all!

You’re right about the donor’s taxes not being my concern; if it matters, my motivation is that I’d like for them to *not* unwittingly get themselves into trouble with the IRS. At this point, it doesn’t seem like it will be a problem *fingers crossed*.

BillD
HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”

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