As a student, will making a donation that’s higher than my yearly income cause me to be audited by the IRS?

As a student, will making a donation that’s higher than my yearly income cause me to be audited by the IRS?

by Susan D. Jarvis, CPA | Jun 12, 2019

askacpaiconI'm considering making a donation of about $6,000, which would be almost all of my savings. Since I'm a student in school, it's higher than my yearly income. I would like to know if this will cause me to be audited by the IRS. If so, what does that mean?

First of all, you should be aware that you will only benefit taxwise from the charitable donation if you can itemize deductions. That may also mean that you will file your own tax return and would not be able to be claimed as a dependent by your parents. This should be discussed with your parents because it may also impact the education/child tax credits.  

To itemize, you would need to have more than $12,000 of itemized deductions (mortgage interest, real estate taxes, state and local income taxes, and the charitable deduction). Will a charitable contribution of this magnitude compared to your income trigger an audit? There’s no way to definitely know that. As long as the charitable gift is properly documented and receipted, that shouldn’t be a factor. 

However, as a student or nonstudent, making a charitable donation that essentially eliminates your savings is not a good idea. We all have causes that we feel very passionate about, and we wish that we could do everything possible to support it. But eliminating your savings, and perhaps your ability to live independently, may in the long run impede your ability to earn a living and support this cause in the future.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Susan D. Jarvis, CPA, is a sole practitioner in Nazareth, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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