Hey guys, Have a question for the forum. We have never tried to itemize charitable business deductions before and wondered if anyone here has. We thought about doing it this year if possible.
I've read on the IRS website that volunteer time and service is not tax deductible. However, what do they consider service as the IRS worksheet doesn't give a definition? Is service just the delivery/set up or is it the use of a a bounce house as well? After all, if that slide in 99 degree August heat wasn't given away to a charity event, it most certainly would have been rented by someone else. So would that count as a loss then instead? I'm vexed and just thought Id ask what you guys do on yours.
I also read on the same IRS worksheet that you can deduct "prizes." We have a couple "free bounce house" coupons that were used at various qualifying non-profit fundraising raffles in 2014. So do you guys consider giveaways like that as a "prize" instead of a charitable service donation on your taxes? Surely we aren't the only ones who have even given away a free bounce house during a fundraising raffle?
Seems like a grey area and even our accountant couldn't give a 100% answer, so I just wanted to see what Mooonwalk has been legally doing/getting away with when it comes to paying the man.
Thanks.
First off you cannot itemized charitable business deductions. Any actual $$$ (cash, check, credit card) given to a charity with business funds would go on a Schedule C (or the proper form for how your business is structured), under other business deductions.
All you can write off is your actual expenses of the donation. Example, we do a Christian radio stations summer event call "VBS Express" each year. Every Tuesday we go to the church they have selected to receive the live radio event, with a 18' slide. We deliver, attended, and take it down and bring it back. I can deduct my actual expenses from this, vehicle expense, and labor. Do not really have any other expenses for this type of event.
I never understand the, have the charity write you a check, then you write them a check for the same amount. It is a wash, just adds another entry on the tax form, there is no tax benefit from doing it this way. You still only get to write off the actual expense. You can deduct the cost of the prize you give away. If it is a bounce house then that will happen through depreciation of the bouncer. If it is a discount, then that will come off the bottom line, or will lower the gross income of your business.
Having the phrase legally doing/getting away with could not be more opposite phrases. Always remember that if you cannot prove the expense then the IRS will disallow it if you get audited. But hey, you have a less then one percent chance of that happening, according to the IRS's own figures.