While no clear definition of a charitable contribution is provided by IRS, a long judicial history offers some insight into how this determination is made. An expenditure must satisfy two requirements to qualify as a deductible charitable contribution.

The second requirement that must be satisfied to sustain a deduction for charitable contributions is that the taxpayer must have intended to make a gift, a detached and disinterested generosity out of affection, respect, admiration, charity or like impulses. No deduction was allowed in cases where the taxpayer’s payments were found to have been made with no such gift intention; the taxpayers expected and received a benefit in exchange for payment.

In one recent case, children of the taxpayer attended a religious private school where 55 percent of the education was dedicated to religious studies and the remainder of the education was secular in nature. The taxpayer argued that 55 percent of the amounts paid for tuition should be deductible, as they related to religious education. The court refused the deduction, finding that the taxpayer received a benefit equivalent to the payments he made, namely, education for his children.

It has long been settled that payments made for tuition are not deductible. However, there are instances where the situation merits attention. For example, in one instance, the taxpayers’ children attended a school where no set tuition requirement existed. Rather, parents were informed of the amounts expended by the school to educate the children and if ample means were available to the parents, they were encouraged to pay at least that amount for each of their children attending the school. The taxpayers in this instance paid an amount in excess of the suggested amount and claimed a charitable deduction for the entire amount paid. The court found that the taxpayers’ payment of the suggested amount was made with the intention of receiving a benefit in exchange – education for their children – and thus characterized that part of the payment as tuition. The court further reasoned that tuition is a personal expense and the tax code provides that no deduction is allowed for personal, living, or family expenses. However, the taxpayers were allowed a charitable deduction for the amount of tuition paid in excess of the value of the education received, which the court held was made with the intent of making a gift.

Accordingly, while in most cases when making payments to your child’s private school you are simply paying tuition, it may be beneficial to review whether all amounts you pay are in excess of the benefits received and, presuming charitable intent, potentially deductible. This determination will differ according to each taxpayer’s unique set of facts and circumstances and you should contact your tax advisor if you have any questions regarding the character of the payments.