Missionary family living with taxpayer

[Openfire]

I have a client who has a missionary family living in his home while they are home on furlough (fund raising). He is paying for all of their food, utilities, etc. Are there any deductions he can take for supporting them during this time? Possibly donations?

[Koss]

Missionary

Your client is certainly making donations, in the form of goods and services, to the family in question.

They are not tax deductible. Donations or gifts to individuals are never deductible. To be deductible, the gift must go to an organization that is tax exempt under IRC 501(c)(3).

In theory, your client might have a tax deductible contribution if the goods and services had somehow been donated to the church, or the missionary organization. And in theory, if he had done so, the organization could then have given those goods and services to the family in question.

In practice, such an arrangement would be exceedingly complicated. I think it would very difficult to establish the proper paper trail.

There are other cases that are a bit simpler. From time to time, I get a question like, "I have a car I'd like to give to very needy family. How can I get a tax deduction?" The answer is: Give it to the family's church, with no strings attached. Make your intention clear, but leave the final decision as to what to do with the car entirely up to the church. You now have a valid charitable contribution, and the church can give the car to the family. (Or they can sell it, and use the money to buy new furniture for the child care facility.)

But food and utilities for people living in the house? The accounting and valuation would be a nightmare for the donor and for the organization.

BMK