Contact UsI am a sole proprietor. On our 2013 return we were able to itemize because of medical expenses and barely exceeded the standard deduction, which means our charitable donations gave us little benefit. In 2014 we expect to have even fewer medical expenses. I hate to stop giving but with no tax benefit, it is hard to justify donating. Is the only option available lumping all of our donations in one year to exceed the standard deduction? Would forming a partnership or corporation give me additional options?
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Tax Professional Answers
John Stancil
You must deduct the charitable contributions in the year the donation was made. However, many people in your situation "bunch" their contributions. Give nothing in one year, then double the next. To facilitate that, you could have a saving account where you keep the contribution monies, then withdraw the funds when you are ready to make the contribution.
Forming a partnership. S corporation (or LLC) would be of no benefit, as the contributions would simply be passed on to you as the owner to deduct on your 1040.
If you formed a corporation, you could deduct up to 10% of the corporate modified net income for charitable purposes. However, this would also mean that the remaining income would be subject to corporate income tax. If you paid yourself a dividend, that would be after corporate taxes and you would be subject to personal tax as well.
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512 weeks ago
Forming a partnership. S corporation (or LLC) would be of no benefit, as the contributions would simply be passed on to you as the owner to deduct on your 1040.
If you formed a corporation, you could deduct up to 10% of the corporate modified net income for charitable purposes. However, this would also mean that the remaining income would be subject to corporate income tax. If you paid yourself a dividend, that would be after corporate taxes and you would be subject to personal tax as well.