The big thing this Holiday season is anonymously paying off lay-away accounts at K-mart. It works like this: go to customer service desk at K-mart (or any other store), and offer to pay someone else’s account. If you have a soft spot for, say, children’s toys, they will help you find an appropriate recipient, within your price range. It’s a really beautiful thing to do.
Is it tax deductible?
No. Tax deductible gifts must be given to a qualified charity, and K-mart is no qualified charity.
That said, a church (or another qualified charity) can collect donations and then distribute them to K-mart or another retailer to pay off layaway accounts. This project would need to be within the mission of the charity.
Don’t think you can give a “donation” to your church, have them give the money to pay off your own lay-away account, give your kids the gifts, and then write them off on your tax return.