What is the tax treatment of charitable contributions?

Individuals who make qualified charitable contributions may deduct those contributions up to 60% of their adjusted gross income, as long as they itemize the deductions on their income taxes. Taxpayers who take the standard deduction may not deduct charitable contributions.

Corporations can deduct certain charitable contributions, though they may not deduct more than 10% of their pretax income in any given year. Excess contributions may be carried forward for up to five years. How your contributions are treated may also depend on the type of contribution you made, such as cash, property or shares of stock.

Certain charitable contributions also count as business expenses. If your business received any benefit in exchange for the donation, such as ad space or event sponsorship, the donation can be considered a business expense.

Key takeaway: Charitable contributions can be deducted, although corporations cannot deduct more than 10% of their pretax income in the same year. Some charitable contributions are also business expenses.

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