Dear Tax Guy,
This year, I bought a portable oxygen concentrator for a friend with terminal cancer. It’s made a huge difference in her quality of life versus hauling short-lived cylinders around.
I’m wondering if it qualifies as a charitable donation. It was purchased for her as an individual, not through any organization. It cost $2,700. If I can claim it, is it cash or a non-cash contribution?
A Caring Friend
Dear Caring Friend,
As we all try to think of good presents for loved ones, I admire your compassionate gift for your friend. But I can’t point to any charitable deduction or tax break for your good deed.
Nor can Michelle Jann, senior wealth advisor at Goelzer Investment Management in Indianapolis, Ind. “For it being considered charitable, it would have to go to a qualified charitable entity,” Jann said.
Furthermore, the charitable contribution deduction also wouldn’t apply if you had found a charity, given that the money/equipment were to be used solely by your friend.
“There’s truly not a way to do that where you can get medical equipment or cash to an individual directly or even trying to use a conduit,” she said. When it comes to charitable donations, “you can tell them how, but you can’t designate a certain person to use it for.”
The medical-expense deduction could have conceivably applied for the purchase of equipment like an oxygen concentrator, Jann said. But this is your friend. The medical expense deduction only applies for a taxpayer’s own costs, or that of a spouse or dependent.
“It’s not like there’s some other way he could have done it and gotten a tax benefit,” Jann said.
“There’s no tax benefit you can obtain, but you have the “psychic income” of making this moment just a little easier for your friend. ”
Your situation reminds me of a story one of my late grandfathers would occasionally tell.
He was back from World War II and in business school on the G.I. Bill. During one class, my grandfather’s professor had a message for his students.
There were plenty more lucrative jobs he could have easily taken, the teacher said. But the professor wanted to be there teaching because of the “psychic income” he derived from the experience.
Literature, art, religious texts and academic research papers are filled with ways to describe that intangible sensation, but that’s the phrase that stuck with my grandfather. And it’s the phrase sticking in my mind here.
There’s no tax benefit you can obtain, but you have the “psychic income” of making this moment just a little easier for your friend. You can’t put a price on that.
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I’m here for the reader who faces their taxes with an air of resignation. You’re just not that into taxes, I get it. I was once that guy. Underneath the jargon, think of your taxes like a maze — with money at the end. Or a trap that you need to avoid.