How to Report Charitable Contributions From a Sole Proprietor's Business


Although self-employed taxpayers can take many deductions for their work-related expenses, they are also eligible to take deductions for their charitable contributions, just like any other taxpayer. These deductions can reduce self-employment income, just like any other deduction, as long as the taxpayer is eligible to itemize.

Determine whether you are eligible to itemize deductions. Assess your state and local taxes, charitable donations, mortgage interest, medical expenses, points paid and miscellaneous deductions to see if there is any chance that when they are totaled, they will exceed your standard deduction. If there is any chance that they will, then you can begin totaling your charitable contributions.

Add up all of the cash donations made to qualified charities during the year. Donations made to any charity that is classified as a 501(c)3 organization are deductible. This includes most medical and religious institutions, as well as humanitarian and educational organizations.

Total up all of the value of any tangible property donated to charity during the year. Remember that only the value of tangible property up to 30 percent of the taxpayer's adjusted gross income can be deducted each year. The remainder must be carried over to the next year. Cash donations in excess of 50 percent of your adjusted gross income must be carried over as well.

Total any amounts carried over from previous years from excess cash or property donations. These are reported separately on the Schedule A.

Report each total on the appropriate line under the charitable donation section of the Schedule A. If your total itemized deductions exceed your standard deduction, carry the total to the 1040.

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