Malcolm Rivera
Political campaigns are not tax-deductible, and neither are donations made to political organisations or candidates. However, there is a level of ambiguity regarding whether political campaigns file 1099s. According to US tax law, certain payments for services rendered in the course of your trade or business are reportable on Form 1099-MISC. However, if a political organisation is registered as tax-exempt, it can certify itself on Form W-9, and the payment is not reported on Form 1099.
| Characteristics | Values |
|---|---|
| Are political contributions tax-deductible? | No |
| Do political campaigns file 1099s? | No, they are not required to issue a 1099 Misc form. However, the income is considered self-employed income and should be reported on an IRS Schedule C. |
| What about donations to political organizations? | Donations to political organizations or political candidates are not tax-deductible. |
| What about Form 1040? | You may have noticed the box on your Form 1040 that asks if you want to give $3 to the Presidential Election Campaign Fund. |
| What forms do political organizations need to file? | Political organizations are required to file Form 8872, Political Organization Report of Contributions & Expenditures, and periodic reports with the IRS. |
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What You'll Learn
Political campaign donations are not tax-deductible
The IRS specifically states that no business expense deduction may be claimed for "any amount paid or incurred in connection with influencing legislation." This means that political candidates cannot deduct their own out-of-pocket expenses incurred while running for office. Campaign expenses for individuals running for any political office or seeking re-election are also not deductible.
While charitable donations are generally tax-deductible, political donations are not. Charitable donations typically refer to gifts made to organizations that qualify under Section 501(c)(3) of the Internal Revenue Code. Organizations under this section are specifically barred from attempting to influence legislation or participating in any political campaign.
It is important to note that while political contributions are not tax-deductible, they are still subject to certain regulations and reporting requirements. The Federal Election Commission (FEC) limits how much individuals can contribute to federal candidates and political committees. For the 2024 election cycle, the donation limit to a candidate is $3,300 per election, per candidate.
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Political organisations are taxed under IRC section 527
Political organizations are taxed under IRC Section 527. This includes political parties, campaign committees for candidates for federal, state, or local office, and political action committees. These organizations are required to file periodic reports with the IRS, specifically Form 8872, "Political Organization Report of Contributions and Expenditures."
To file taxes, a political organization must have its own Employer Identification Number (EIN), even if it does not have any employees. An EIN can be obtained by filing Form SS-4, Application for Employer Identification Number. Additionally, many political organizations must electronically file their periodic reports. To do so, they will need the username and password issued by the IRS after filing their initial notice (Form 8871).
The requirement to electronically file Form 8872 is a result of an amendment to IRC Section 527(j), which came into effect on January 1, 2020. This amendment mandates the e-filing of Form 8872 for periods beginning on or after that date. The form must be filed with the IRS, and organizations can use the "Political Organization Filing and Disclosure" link to file it electronically.
It is important to note that there may be additional filing requirements for political organizations under IRC Section 527. These requirements can vary, and organizations should refer to the specific guidelines provided by the IRS to ensure compliance with all applicable rules and regulations.
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Income from working on a political campaign is considered self-employed income
Political parties, campaign committees for candidates for federal, state, or local office, and political action committees are all considered political organizations under IRC § 527. These political organizations are subject to tax and may have filing requirements.
As a self-employed individual, you may be able to take advantage of various tax deductions to lower your taxable income. These deductions can include expenses directly related to your work on the political campaign, such as travel costs, equipment purchases, or advertising fees.
Additionally, as a self-employed individual, you will typically need to pay self-employment taxes, which cover Social Security and Medicare taxes. These taxes are typically paid through quarterly estimated tax payments, and the specific rates and thresholds can be found on the IRS website.
It is important to keep accurate records of your income and expenses when working on a political campaign. This will help you accurately report your income and claim any eligible deductions when filing your tax return.
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Political organisations must have their own EIN
Political organisations, including political parties, campaign committees for candidates for federal, state or local office, and political action committees, are subject to tax under IRC Section 527. These organisations are required to file periodic reports on Form 8872 with the IRS.
To file taxes and other periodic reports, a political organisation must have its own Employer Identification Number (EIN), even if it does not have any employees. An EIN is a unique, nine-digit number assigned by the IRS, which is used to identify taxpayers. To obtain an EIN, an organisation must file Form SS-4, Application for Employer Identification Number.
The process for obtaining an EIN for a tax-exempt political organisation may differ from that of a taxable political organisation. The IRS provides specific guidance and forms for tax-exempt organisations seeking an EIN.
It is important to note that the EIN is separate from the username and password issued by the IRS for electronic filing. To file Form 8872 electronically, the organisation will need the username and password received after filing its initial notice (Form 8871).
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Political organisations must file Form 8872
Political organizations are subject to tax under IRC Section 527, and many have filing requirements with the Internal Revenue Service (IRS). These include political parties, campaign committees for candidates for federal, state, or local office, and political action committees.
Political organizations that are tax-exempt under Section 527 must file Form 8872, the Political Organization Report of Contributions and Expenditures, to report certain contributions received and expenditures made. This form must be filed with the IRS, and organizations must have a username and password to file electronically.
Form 8872 must be filed within 30 days of receiving $25,000, and it can be filed monthly, quarterly, or semi-annually, but the filing basis must remain the same for the entire calendar year. The form must be filed for any periods beginning on or after January 1, 2020.
Some organizations are exempt from filing Form 8872, including those that engage in exempt function activities with respect to elections for state or local offices only. Additionally, a state or local candidate or officeholder is not required to organize a formal committee to be exempt from the Form 8872 filing requirements.
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Frequently asked questions
No. Political contributions to a party, campaign committee, or candidate are not tax-deductible.
It depends on the circumstances. If a service is paid for "in the course of your trade or business", it is reportable on Form 1099-MISC. However, if a political organization is tax-exempt, the payment is not reported on Form 1099.
Form 1099-MISC is used to report miscellaneous income. This includes income from working on a political campaign as a self-employed individual.
Income from working on a political campaign is typically considered self-employed income and should be reported on an IRS Schedule C. Expenses incurred while working on the campaign may also be deductible.
