SOURCE: US Tax Professionals

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November 22, 2017 13:16 ET

US Tax Accountant Talks Tax Breaks for Small Businesses

US tax accountant reminds everyone that tax breaks for charitable giving can be beneficial to small businesses in the tax season

VANCOUVER, BC--(Marketwired - November 22, 2017) - As a firm specialising in tax preparation for Americans and Canadians living cross-border, the team at US Tax Professionals have published a blog on how small businesses can benefit from tax breaks for charitable giving. For more, go to:

It's important to note that not all charities are created equal, so verify that the organization is qualified according to the IRS. There are two ways to verify whether a charity is qualified: use the IRS online search tool, or ask the charity to send you a copy of their IRS determination letter, which will confirm their exempt status.

Next, it's important to make sure the deduction is eligible. In order to take the deduction on a tax return, it's vital to make sure the gift qualifies. Charitable giving includes the following: cash donations, sponsorship of local charity events, in-kind contributions such as property, inventory, or equipment.

For example, an organization may engage in some lobbying, but too much risks the loss of its tax-exempt status. It's not possible to claim a charitable deduction (or business expense) for amounts paid to an organization if both of the following apply.

  • The organization conducts lobbying activities on matters of direct financial interest to your business.
  • A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expense

Remember to inquire about any limitations when it comes to charitable contributions. Sole proprietors, partners in a business, or shareholders in an S-corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Corporations (other than S-corporations) can deduct charitable contributions on their income tax returns, subject to limitations.

The blog goes on to list limitations that apply to sole proprietorships, partnerships, and S-Corporations. For example, "As a sole proprietor (or single-member LLC), you file your business taxes using Schedule C of individual tax form 1040. Your business does not make charitable contributions separately. Charitable contributions are deducted using Schedule A, and you must itemize in order to take the deductions."

Remember, each category of donation has its own criteria with regard to whether it's deductible and to what extent. For example, mileage and travel expenses related to services performed for the charitable organization are deductible, but time spent on volunteering your services is not.

The blog wraps up by reminding gift givers about the importance of good record keeping. "Ask for-and make sure you receive-a letter from any organizations stating that said organization received a contribution from your business. You should also keep cancelled checks, bank and credit card statements, and payroll deduction records as proof or your donation. Further, the IRS requires proof of payment and an acknowledgement letter for donations of $250 or more.

Finally, the blog ends with a neat summary of six things to keep in mind about charitable donations and written acknowledgements. Any small business owners who have questions about charitable donations should contact a professional tax accountant. To speak to a team member at US Tax Professionals, call 604-949-1559.

About the Company

US Tax Professionals provide tax services for dual American and Canadian citizens in Vancouver. Founded in 2013, they specialize in taxation for US citizens and expats, taxation and accounting for business, cross-border taxation for US and Canadian citizens, as well as accounting and taxation of alternative investments, including private equity funds and hedge funds.

For more information, visit or call (604) 949-1559.

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