Last year, if your clients made a donation to a university that gave them the right to buy tickets to a sporting event, sometimes known as personal seat licenses (PSL), they could deduct 80 percent of that donation from their taxes. If they received tickets in return for their donation, they could deduct the donation less the value of those tickets.
When the Tax Cuts and Jobs Act was passed, it repealed that rule. Instead of claiming 80 percent of the donation for the PSL as a deduction, taxpayers cannot claim any of the donation as a deduction beginning with tax year 2018.
So, what if your client still wants to support their alma mater’s football team and get a tax deduction? Here are some potential deductions for football season that you can ensure your clients are aware of.
Other Donations Are Still Tax Deductible
Although tax reform did away with the tax deduction of PSLs or seating for sporting events, it didn’t impact other opportunities to donate to a university’s sports program while reaping the benefit of a tax deduction. If taxpayers support the booster club, attend charity dinners or donate items to raffles, those donations are tax deductible.
If your clients do support a booster club, you’ll want to do your homework on the organization since it’s not formally part of the university. At a minimum, ensure the booster club is a qualified 501(c)(3) organization. If your clients give a donation and get anything in return, their deduction will be reduced by the value of the item.
As with any donation, remind your clients that they will need to get appropriate documentation of your donation. This can be in the form of a canceled check if they donated less than $250. If it’s more than $250, they will want something from the university that includes the amount, date, and what, if anything, they received in return; this will be sufficient to support your donation.
Donations to a University
Donations to a university can be tax deductible as long as they are a 501(c)(3) organization. Universities generally fit into a 501(c)(3) organization because of their educational purposes, but it’s important for your clients to confirm this before making a contribution.
Your clients can also make a donation to a particular sport or club at the university. Most universities will let you designate your donation to go to that sport or club, and when funds are transferred, they are moved to the appropriate account. This is especially useful for sports and clubs that don’t have their own fundraising person and don’t get a lot of donations. These donations can be 100 percent tax deductible subject to adjusted gross income limits.
It’s important to note, certain charitable contributions of cash to a public charity or organization are now subject to a limitation of 60 percent of a taxpayer’s adjusted gross income, up from a 50 percent limitation. Any excess can be carried forward into future years.
So, despite the most recent tax law change affecting sporting event seats, you can still help your clients identify opportunities to make many other tax-deductible donations to their universities’ sports programs.