How Will the New Tax Laws Influence Your Charitable Deductions?
Most of the people I work with are cosmetologists, barbers and massage therapists and they are active participants in their faith based communities as well as their local areas. Donating clothing, food as well as money is a big part of the way they live their lives, but being able to use this generosity as a tax deduction is a big help.
I know a young lady that goes to a nursing home and styles the lady’s hair and give the men haircuts for free and this is just her way of giving back to the community. There are many opportunities for beauty industry experts to provide services for a charity event or other non-profit organization.
If you fall into this category of professionals and you are donating your services, you can deduct your mileage, and the cost of the hair or massage products that are used. You CANNOT deduct a dollar amount for the hours of service.
Corporations can deduct the donations on their corporate taxes. If you are a Sole Proprietor or a Single Owner LLC, you will include the donations on your individual tax form, not the Schedule C. For Partnerships or S Corporations, the donation will be reflected on the Form K-1 that is provided by the business to the partner or shareholder.
Currently, the standard deduction is $6,350 for single taxpayers and $12,700 for married filing joint. That means if you have more than $6,350 in itemized deductions, the less you pay in taxes. Many people use the Charitable Contribution Deduction to help their communities as well as reduce their tax liability. The more you donate, the higher your deductions. With the new tax laws going into effect in 2018, the standard deduction will be increased to $12,000 for single taxpayers and $24,000 for married filing joint taxpayers. This increase in the standard deduction will make it difficult for taxpayers to meet this threshold with itemized expenses, and that may hurt local charities.
Please continue to be generous to your communities and keep accurate records of your donations. An evaluation of your unique situation will need to be done to determine whether your donations will be deductible. You can contact us at firstname.lastname@example.org or 407-988-5647 for assistance with this matter.
Categories: Tax Information