Estimated tax tip savings. Let’s say you make a $5,000 donation to a charity. By treating this donation as a business expense rather than a charitable contribution, you could increase your tax savings by $2,743. As you will see, your exact tax benefit will depend on your specific tax situation.
You probably see ads all the time soliciting donations for charity and telling you that you can write off your contribution of cash or property.
Sometimes these claims are true and sometimes not, but here’s the real kicker—even when you do qualify for a full charitable deduction, you may not get any tax benefit for this deduction on your tax return!
The deduction for charitable donations is an itemized deduction. That means you get zero dollars in tax savings unless your total itemized deductions exceed the standard deduction of
$6,300 for individuals
$12,600 for married couples filing jointly
Even if you make a big donation, think about the problem this creates—suppose you are married and donate $13,000 to charity. If this is your only itemized deduction, your donation creates tax savings of only $100 ($13,000 - $12,600, multiplied by a 25 percent tax rate).
You could say that your $13,000 deduction is not working as hard as it should.
Fortunately, there’s a much more profitable way to give. As a business owner, you can convert your charitable donation to a ... Log in to view full article.