Tax Deductible Charity Contributions

(Part of our Self-Employed Tax Guide)

As a Self-Employed Small Business owner, this is one of the better self promotion tools out there as well as a fantastic scheduled tax write off if prepared and implemented properly. What greater way to get your small business’s services and products noticed by a significant audience and gain the tax benefits to boot! This could well look too good to be genuine! Let’s look more closely at some of the various ways this can reward your company.

Products and ServicesContributions to charitable organizations that are considerable, in that they offer a fair market value of $250, should meet the requirements for tax breaks and deductions, help you make room for new, trending inventory, and allow you to make a positive impression on present and new buyers that could be marketed through a press release–for instance “local small business _____ donates 50 winter jackets to the indigent.” Press releases of this kind hold a large appeal.

Another example would be for services which you offer to the public. This approach is an excellent way to perform community service and also receive a tax deduction as well. The United Way and other such organizations frequently host events where needy and indigent folks assemble to receive, en masse, services which they can’t afford or don’t have access to. Your support would be classified as a charitable contribution at fair market value and the organization will give you a receipt declaring the value of these services for taxation purposes. For your purposes, this receipt and any of the materials used would be considered write-offs. Please make note these events pull such a sizable gathering of individuals that by way of referrals and coverage your small business might be seen by numerous individuals. Other examples may include donating scrap material from your finished goods. This may be something as simple as excess vegetables, or a merchandise which doesn’t meet company requirements and thus could not be sold. And again the fair market value regulations apply.

Cash Contributions

This specific kind of donation is the most common and is the least difficult to maintain. Per internal revenue service laws, a receipt is required for any one contribution above $250 so as to claim the deduction. One strategy is planned giving. This can be done monthly, quarterly, or annually depending upon your calendar. Normally, pledge contributions are made at events such as a Charity balls and honored throughout the year right up until the agreed target has been achieved. As a business owner, this is a good way to plan out your annual charitable deductions and monitor your cash flow reserves. These are just a couple of instances of how your small business may well benefit the community, improve the public’s perception , and receive a tax break in the process. Do remember whenever possible, consult your tax accountant for tips on your Schedule C form because restrictions apply to this type of write-offs. References for this specifics can be located in PUB 526 and the guidelines for disclosures in Publication 1771.

Redmond CPAAbout Redmond CPA
Redmond CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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  • Huddleston Tax Accountants / Huddleston Tax CPAs – Redmond, WA
    Certified Public Accountants Focused on Small Business
    8201 164th Ave NE Suite 200 / Redmond WA 98052
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    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
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    We serve Tukwila, Auburn, Federal Way. We have a few meeting locations. If you are looking for a Redmond CPA firm, get in touch with us! Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.