Things You'll Need:
- Documentation of the donation
- Schedule A form
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Step 1
Determine whether the charities your business contributed to are "qualified organizations" according to the IRS. Ask the charity to see its IRS letter recognizing its tax-exempt status.
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Step 2
Keep the necessary records to document your charitable giving. For contributions totaling more than $250, you must have a letter of receipt from the organization as evidence of the donation. For contributions of less than $250, a canceled check or bank statement will do.
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Step 3
Determine the fair market value of charitable donations in the form of property. If your business donates a vehicle or merchandise from your inventory, your deduction will be equal to the cost of the property on the retail market.
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Step 4
Subtract any compensation you receive from your donation from the amount you can deduct. For example, if you receive a gift worth $20 for a $100 donation, you can then deduct a total of $80.
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Step 5
Determine who will take the charitable deductions on their income taxes from the business. If you have a sole proprietorship, it will be you as the sole proprietor. If your business is a partnership or owned between stockholders, you can split up the donations accordingly.
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Step 6
Include charitable donations on the Schedule A form from the IRS and file it with your taxes (see Resource below).
