Charitable Contributions

[centrexcr]

I own a carpet cleaning company.  Last year I cleaned 2 churches as a charitable contribution.  From the choices given, it looks like I need to choose C - noncash contributions (50%).  But do I enter the whole amount, or 50% of the amount?

[BillM223]

I take it that this company is a sole proprietorship and not a corporation or partnership?

The 50% refers to the fact that a contribution in this category cannot exceed 50% of your income.

Enter the full amount of the materials used in this job (you cannot deduct the value of your time) and let TurboTax determine if it needs to be limited.

[centrexcr]

LLC, S corp

[DawnC]

The rules governing charitable giving are similar for businesses and individuals. If you’re a sole proprietor or LLC, your business taxes are filed on your personal return. In order to gain a tax benefit, you have to itemize your deductions on Schedule A.

If your business functions as a partnership, business income and expenses are passed to the individuals on Schedule K-1 based on the percentage of ownership.  If you own 60 percent of the business and your partner owns 40 percent, you could deduct $600 of a $1,000 donation provided that you as an individual qualify for the deduction.  Multimember LLCs and S corporations work the same as partnerships.

Partnerships do not pay income taxes. Rather, the income and expenses (including deductions for charitable contributions) are passed on to the partners on each partner's individual Schedule K-1. If the partnership makes a charitable contribution, then each partner takes a percentage share of the deduction on his or her personal tax return. 

A donation of cash or property reduces the value of the partnership. For example, if a partnership donates office equipment to a qualified charity, the office equipment is no longer owned by the partnership, and the total value of the partnership is reduced. Therefore, each partner's share of the total value of the partnership is reduced accordingly.