Tips for reporting goodwill donations on your business taxes
Everyone wants to get a tax deduction where possible, and one of the ways that some businesses get tax deductions is through charitable or goodwill donations.There are a lot of charitable donation options that are available, and most of them include giving to non-profit organizations, non-profit public schools, non-profit hospitals, and government relief agencies.Giving to organizations such as these is really wonderful, because not only are you getting a tax deduction, but you also are able to help and give back to your community in a positive way.Consequently, you also might get good advertising exposure through your goodwill donations!However, after the donations are made, some people aren't quite sure what they need to do to report goodwill donations on their business taxes.Here are a couple of tips for reporting goodwill donations on your business taxes:
1. Check to see what the tax stipulations are for you:Depending on the state where you live, there could be special or unusual stipulations for goodwill donations and business taxes.You also need to keep in mind that some donations are not going to give you a tax deduction - instead, you might actually need to pay taxes to cover your donation (particularly if you donated items instead of money). You or your financial advisor should check to see what the tax stipulations are for you.For example, in the state of South Dakota, a business donating items like prizes for a contest or a fundraiser needs to pay tax on the cost of the donated item (if sales tax was not previously paid on the item).It is a good idea to make sure that you are aware of the tax requirements before you make any type of donation.
2. Make sure that your donation will "count:" You also will want to make sure that the organization to which you are donating actually will "count" as a tax deduction.The government is rather strict about where businesses can give goodwill contributions for tax deductions.Most organizations need to have some type of federal approval, and they will have some type of a status like 501(c)(3).Before you even donate or try to report goodwill donations on your business taxes, you will need to make sure that you donated to a federally approved organization.
3. Use Turbo Tax:One of the easiest ways that you can report goodwill donations on your business taxes is with the help of Turbo Tax.Turbo Tax is a program by Quicken which has become one of the most popular tax programs today.Many large and small businesses prefer to use Turbo Tax to help them figure out all of the things that they need to report on their taxes - including goodwill and charitable donations.One of the great things about Turbo Tax is that the program can help you to easily import your donation information onto your tax information!If you are a busy person that does not have a lot of time to figure out your tax information, then you will want to use a program like Turbo Tax to quickly help you fill out everything!
4. Have a financial advisor help you:It is a good idea to have a financial advisor or an accountant help you report goodwill donations on your business taxes.Although you may feel like you can do it yourself, you should probably have someone at least review your report and information, making sure that everything is correct.This way, you will be able to file an honest and legal report for your goodwill donations on your business taxes!