Over 22,000 people in Maricopa County were homeless last year. With such a statistic, many businesses feel the need to get involved. When small businesses donate to charitable organizations, like Paz de Cristo, it does more than boost employee morale and increase the well-being of your community. There are tax breaks associated with charitable giving that can be given to small businesses — they aren’t just for individuals. If you own a business that is considered small or medium-sized and are dedicated to bettering the lives of those around you, you can benefit as well! You can receive tax breaks if you carefully follow the steps we’ll be discussing in this article.
Educate Yourself on Donations
There are rules to donating funds and items that not only make the process easier for you but are required in order to receive a tax break. To take a charitable deduction, you must ensure that you itemize your deductions. To do this, you should be certain that your total deductions are greater than your standard deduction. Otherwise, you should keep to the standard deduction.
Knowing what types of donations are deductible, and to what length, is integral, as not all donations are considered equal by the IRS. Say you are traveling to a location to volunteer your services for Paz De Cristo. Perhaps you are taking time to feed evening meals and food boxes to the hungry. The money spent on travel would qualify as deductible, but the time spent volunteering is not. The rule of thumb is that money spent on donations is deductible while time and energy spent on community service opportunities are not. Both actions are valuable and support the community, but it’s good to know and keep record of these for tax purposes.
Should you choose to donate tangible items such as clothing, toiletries, toys, or furniture to those in need, the quality of the items is also important to note. The IRS recognizes items that are in ‘good condition or better’ as deductible. Should you decide to donate clothing in good condition to Paz de Cristo, it could be used for our guests to receive a fresh start.
Keep Track of Funds Directed
Keeping thorough records of donations, whether they be cash or clothes, is vital for receiving a tax break. Card statements, payroll deductions, and proof of donation are all things to keep a record of. If you’re donating more than $250, the IRS needs a letter of acknowledgment of some form, so keep these stored away for tax filing season.
If you have further questions about tax breaks, such as ‘How does the charitable tax credit work?’, or would like to get involved with Paz De Cristo, reach out today! We’d love to hear from you.