Taxpayer asks:
I give monthly to a Christian Radio Station. Is this considered a deduction since it comes out of my blogging business account, not my personal account???
taxgirl says:
I love this question because there are a bunch of issues here…
One, it’s smart that you’re keeping your blogging business and personal account information separate. That makes figuring out your taxes a lot easier. So kudos to you.
Two, expenses which are attributable to your business – and not to you personally – are often classified differently than individual taxpayer expenses and may not always be deductible in the same way. This might be one of those cases. If I’m reading your question correctly, it sounds like you might want to take a charitable deduction on the business side for your monthly contributions. Assuming that the contributions would otherwise qualify as a charitable deduction, you cannot usually deduct charitable contributions as business expenses. If this is something you do as a charitable contribution, you may want to consider making the donation out of your personal funds in order to take advantage of the deduction. To the extent that you receive any benefit from the donation, you’d want to back that out of your deduction.
That said, if you can classify these contributions as promotional expenses or advertising (I’m not sure of the exact nature of the payments), it would be deductible as a business expense. In fact, it’s often the case in business that some thoughtfulness would result in changing the character from an expenditure that isn’t deductible to one that is. For example, many businesses are asked to give money to sports programs for kids; that isn’t deductible on its own. But placing an ad on the outfield wall (which may benefit the program) or sponsoring the team shirts in exchange for having your company logo on the shirt changes the nature from a simple donation to promotion. Of course, you’d want to consult with your tax professional to see how the specifics apply to your own business.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
Would this also apply to any tithes or contributions you give to a church out of your business account?
Lazy Mom, Same analysis, yes. From a deductions perspective, if you itemize, it likely makes more sense to pay your tithes out of your personal account.
If it did come from the corporation, though, you can generally deduct up to 10% of taxable income.
It depends on how the business is structured, actually.
Qualifying charitable contributions made by a C-corporation are deductible as a business expense, up to 10% of net taxable income with some limitations, see http://www.irs.gov/instructions/i1120/ch02.html. Qualifying charitable contributions by partnerships and S-corporations flow through on Schedule K-1 to the partners or shareholders respectively and can be deducted by them on Schedule A. Qualifying charitable contributions made by sole proprietors can be deducted directly on Schedule A, even if the contributions were made out of the business funds. See http://www.irs.gov/publications/p535/ch11.html.
Much better answer than mine, Mike, thanks.