crowdfunding tax deduction

Are your contributions to crowdfunding websites such as Kickstarter, GoFundMe and YouCaring etc.. qualified for a tax deduction on your taxes?  The answer is no.  The IRS only allows deductions from Qualified Organizations.  

The definition of a Qualified Organization by the IRS:

A qualified organization should be presented as a 501(c)3 and usually will indicate that it is a non-profit in its description, which means it has applied with, and received, tax exempt status with the IRS. Qualified organizations can include: “nonprofit groups that are religious, charitable, educational, scientific or literary in purpose, or that work to prevent cruelty to children or animals” (§ 1.501(c)(3)-1). Donations made to an individual or other organizations, such as a civic group or a political campaign are NOT deductible as a charitable contribution. Nor is a donation to a foreign charity deductible (this is different than a US charity working in a foreign country, which would be deductible if it is a 501(c)3) with the exception of certain Canadian, Mexican and Israeli organizations, because the U.S. has treaties with these countries.

However, if you receive a benefit when you have a donation through these sites to a qualified organization, the benefit you received would have to be subtracted from the amount you have donated.  Regardless of the method used to make your donation, if it is to be eligible as a charitable tax deduction you must always retain a receipt if your donation exceeds $250, you must have written acknowledgement from the charity.

One thing that is important to note is that as a business you can argue within reason that your donation is a business expense such as advertising and promotion.  Of course, this donation must acquire your business some benefit so it is considered reasonable.

CategoryBusiness
Write a comment:

*

Your email address will not be published.

© 2017 Honest Accounting Group, LLC | You Run Your Business, We Will Do The Bookkeeping!

logo-footer

STAY CONNECTED WITH US: