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Charitable donations from S-Corp

Linda,

I am the owner/sole employee of my S-corp. Can my S-corp make charitable donations (assuming cash donation and getting receipt from the charitable organization)? Is this a qualified expense for my S-corp?

I personaly don't itemize on 1040 and every year I donate more than $1000. Assuming I am at 25% tax bracket, I can save $250 by donating from my S-corp.

How to handle this in Quick Books ?

Regards,
Jewel.

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S-Corp Donations

Actually, you won't get the tax benefit of the donation.

Certain items, like charitable contributions flow to the personal part of your return. So even though the S-Corp makes the donation it's reported to you on the K-1 and then you report it on your Schedule A.

Since you don't itemize you wont get the tax benefit of the contribution.

However, when the S-Corp make the contribution, that means you don't have to take that money out as salary & so save the payroll taxes.

In QuickBooks I like to create a Charitable Contributions account in the Other Expenses account type. That way it's easier for me to reconcile the ordinary net income with the tax return.

Hope this helps.
L:)

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