Charitable Donations and Deductions

If you are familiar with being able to deduct charitable donations, a heads up before you keep reading, this is probably going to bum you out.

Nerd Language – The Tax Cuts and Jobs Act amended the Internal Revenue Code of 1986 and reduced tax rates for business and individuals. This eliminated personal exemptions so that it’s less beneficial to itemize deductions.

Now, I just want to preface this by saying, Tax Cuts and Jobs Act has done a lot of amazing things for business owners. However, this isn’t one of them.

They recently got rid of the tax deductions for client (and prospective clients) golf as well as charitable golf.

In the Tax Cuts and Jobs Act, there used to be a 100% business deduction for charity golf and other charity sporting events, but this has been eliminated. In the past, you’ve been able to take a deduction for at least 50% but now that number is zero.



So is there an innovative way around this new change?

You betcha.

One way around this, is you could make a general donation to the charity and ask them to give you a free entry. So, for example, if your charitable golf tournament is $1,000 for a foursome, you could suggest you make a $1,000 donation to the charity and then the charity could simply give you free admission into the foursome.

Ask your charity if they offer this. My guess is that in the future this is the route they’ll be taking.

A lot of money is typically spent annually for charity sporting events. If you use my strategy of donating $1,000 then asking for an entry, that might be a great route to take and the charity can also suggest this to other donors, as well.

Worst case scenario with the IRS is they would let you only deduct greens fee. This fee would include the gift bag, food, drink, and prizes. If all of that extra stuff was valued at $500 you could only take the other $500 as the deduction. This is just something to keep in mind.

Important note: If you’re a sole proprietor you can’t claim a charitable deduction on your schedule C. You would need to do it from your personal tax return. And remember to make sure the check you write is written out for the charity.

The reason this topic bums me out is because it could slow down the amount of giving to charities. In years past, a benefit to charitable donations is you’ve been able to write them off completely.

Tax laws change from time to time so that’s why it’s even more important to hang with us at BollitProof. We will find innovative ways to work within the system and maximize the deductions.

It just requires a bit of creative thinking to get there.