Charitable contributions are a seemingly magical thing—give to the poor and save money in return. And although this sounds wonderful in principle, there’s more to charitable contributions you should know before forming a business strategy around them. To help you, we've created a list of 3 things that will make navigating the tax waters a lot simpler.
Documentation is key. Many business owners think they can wait till the end of the year to make an estimated guess on charitable donations. Wrong, only those who itemize their deductions will get a tax benefit.
2. Deduction Amounts
You might not be able to get a deduction for the full amount of expenses at a charitable event. If you receive any benefit from a donation, you can only deduct the difference between the value of the benefit and the cash you donate. If for example you host a charitable dinner, you will not be reimbursed for the food since it provides you with direct value.
3. Appreciated Property
When people think of charitable contributions, they often think of tangible objects or money. But you can also make donations with appreciated property like stocks. In return you should get a deduction for the current value without having to pay taxes on the gains.
As an aside, we believe that no matter the economical benefits to be gained from charitable contributions—there are intangibles that simply can’t be written in numbers.