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I just got an email from American Airlines asking me to donate to Red Cross through their website and that I would obtain miles if I did so. The "exchange rate" is 10 miles for a dollar which translates to 10 cents for a dollar.

Because I donate very little, I never bother to calculate deduct from my taxes. However, my questions are as follows:

  1. Can I deduct from taxes the donations I made through a private for-profit company like American Airlines?

  2. Can American Airlines deduct from their taxes by simply sending along my donations to Red Cross?

  3. If the answer to both questions was "yes", is that inflation of donations? If yes, how is it legal?

Before asking this question here, I did try to do my own research on Google, but all I found were Reddit posts that had questionable answers and an AP News article: https://apnews.com/article/fact-checking-000329849244 .

The article concluded by saying:

Checkout charity campaigns bring in millions of dollars for charitable organizations each year, but customers should know they aren’t obligated to give when prompted, according to Zaretsky. They should also know, though, that a donation option at the cash register isn’t a sign of a money-hungry organization looking to lower its tax bill.

“A corporation is not ripping you off in order to lower its own taxes by asking you to round up,” Zaretsky said. “They’re just trying to help another organization.”

However, the way American Airlines is essentially selling "bonus miles" in exchange for my US dollars, can they call this income and by donating a part of the money I used to "buy" these miles, get a tax break?

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    As an aside, in the email I received from American Airlines, clicking the link takes you directly to redcross.org. So it looks like you are giving directly to the Red Cross and AA is just tracking your donation to them. Oct 2, 2022 at 12:06

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  1. Yes
  2. Yes, but the money they received from you would be assessable income to them resulting in no net tax advantage.
  3. See answer to 2 above.

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