On July 25, 15-year-old Keiearra Williams, 10-year-old Joseph Reed, and 7-year-old Terrence Moore were selling fruit for a church fundraiser in Philadelphia when they were mowed down by a sport utility vehicle. Joseph died at the scene; Terrence and Keiearra were pronounced dead at the hospital.
Cornelius Crawford was at the wheel of the vehicle, accompanied by his partner in crime, Johnathan Rosa. The pair had stolen the vehicle and sexually assaulted the owner before crashing the car into the children, killing all three and injuring their mother.
The crime saddened and angered Philadelphia residents, a town that has grown used to its share of bad news and tragedies. But this one felt different. You couldn’t look at the photos of those victims and conjure up some kind of excuse to make it somehow make sense. There was no sense to be had. They were just kids. They were with their mom. They weren’t doing anything wrong. And they were killed.
District Attorney Seth Williams said, about the tragedy, “All Philadelphians have been moved to tears by this crime.”
It turns out that at least one former Philadelphian was pretty moved, too. Former Seventy Sixer Charles Barkley has stepped in and offered to pay the funeral expenses for the children. Barkley recently contacted Williams who put him in touch directly with the children’s family.
Barkley was introduced to Philadelphia as the fifth pick in the first round in the 1984 draft (yes, the same draft that boasted Michael Jordan). His Philadelphia 76ers teammates at the time included Dr. J (Julius Erving), Moses Malone, and Maurice “Mo” Cheeks. Barkley stayed with the Sixers through 1992 when he was traded to the Phoenix Suns. He would eventually move onto the Houston Rockets before retiring. Despite his successes with the Suns and the Rockets, many of us in Philadelphia still consider him a Sixer. His response to the tragedy suggests that he still has a soft spot for the city, too.
While Barkley’s overture feels big-hearted and charitable, for tax purposes, it’s not – at least not the charitable part. There will be no federal income tax deduction available to Barkley if he pays the family or the funeral home directly. Remember: you can’t claim a charitable deduction for donations made to an individual or limited group of individuals, no matter how well deserving.
Donations are only deductible when made to a qualifying charitable organization (you can check online to see if an organization qualifies using the IRS Select Check Tool). Unfortunately, there aren’t many organizations in the U.S. that help defray the cost of funeral expenses.
And while the payment may feel, at first blush, like a taxable boost to the family, it’s not. Barkley’s offer was clearly made with no expectation of anything in return. It’s a gift for tax purposes and gifts are never included as income by the recipient. There may be a gift tax payable by the donor if the gift exceeds the annual exclusion for 2014 is $14,000 per person. Barkley hasn’t indicated publicly how much he might be paying but the average cost of a funeral is $6,600; cemetery services, including the gravesite and vault, can cost an additional $3,000, according to Joshua Slocum, executive director of the Funeral Consumers Alliance.
As for those carjackers? Tips might have helped police track them down (though one eventually did turn himself in). A reward of more than $100,000 was offered for information leading to their arrests. The reward was originally $20,000 but grew quickly, including funds from the City of Philadelphia and the Fraternal Order of Police. It’s worth noting that donations to those organizations are tax-deductible.
There’s no word yet on whether any of the reward money will actually be paid out to tipsters. When and if money is paid out, chances are that it’s not reportable for federal income tax purposes. According to the instructions for the form 1099-MISC:
A payment to an informer as an award, fee, or reward for information about criminal activity does not have to be reported if the payment is made by a federal, state, or local government agency, or by a nonprofit organization exempt from tax under section 501(c)(3) that makes the payment to further the charitable purpose of lessening the burdens of government.
Barkley may be the only one here who walks away without a tax break. What he’s doing, however, is bigger than tax. Kudos to Barkley for his kindness.
