With December coming next week, the holiday season will be in full swing and businesses of all sizes will be solicited by charitable organizations for donations. The proverbial benefits to making these types of donations are that a needy group will benefit, and the business making the donation will benefit with a tax break.
While this remains a common thought, it may not always be the case. This is because the only corporate entity that is able to receive a deduction after making a cash charitable contribution is a C corporation. For those who are sole proprietors and S corporations (including LLCs who choose to be taxed as S corporations), charitable cash donations are listed on Schedule A of their tax returns. As such, a benefit will be realized if deductions are itemized and are more than the standard deduction allowed.
This means that charitable cash contributions may not be deducted on Schedule C, and they may not qualify to reduce one's self employment tax. This means that the IRS will view these payments as personal expenses made from business funds.
This may change if you are donating your time and expertise to a charitable organization. For instance, if you reviewed business plans for prospective entrepreneurs hosted by a church. While you may not deduct your standard hourly rate (because the IRS doesn't place a value on your time, ironically) you may deduct the mileage to and from the church as well as the costs of producing documents advertising your services at the event.
For additional information about tax deductions, an experienced attorney can help.