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> Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Pulling numbers out of

> Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Pulling numbers out of the air here, but if they make $100 in sales with $80 in costs, they'll take an $80 deduction for their costs and pay taxes on the $20 profit. If they make $100 in sales, plus accept $30 in donations for a total of $130 in revenue, and have $80 in costs, they'll send the $30 to the charity, take a $30 deduction in their taxes for the donation, another $80 deduction for costs, and finally pay taxes on the $20 remaining profit. Obviously, it's far more complicated than that, and actual numbers will be wildly different, the point still remains that they do not get a tax advantage.

syzarian 4y ago
Edit: Misread what was intended.
- Sohcahtoa82 4y ago
  That's basically the point I'm making.
  - deleted 4y ago
    [deleted]
  - syzarian 4y ago
    When you write they deduct the $30 donation I thought you were meaning deduction on taxes. Your first paragraph is misleading. There is no tax write off since the money donated is not revenue and is not deducted in the tax sense. It’s just pass along money. The business can write off the expense of the accounting though.
deleted 4y ago
[deleted]
gamblor956 4y ago
> Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Businesses are not allowed to take charitable deductions for donations made using funds collected from customers for the stated purpose of donating funds to a charity (i.e., "round up for charity"). The money being donated is not the business' money to donate, ergo they are not the party making the donation and do not get the tax benefit of it. Technically, the customer gets the deduction, but for donations of a few bucks its not worth it for the business or the customer to bother with the donation receipt. Note that this does depend on the language of the solicitation. If they say "we'll donate" they can take the deduction, but they must also gross up their own revenue to include the "donated" funds, so they get no tax benefit.
- Sohcahtoa82 4y ago
  Did you read the rest of my message, or did you see that first line and stop there? We're in agreement.
  - gamblor956 4y ago
    We're in partial agreement. I only agree to the extent that the business says that "we" will donate on the customer's behalf, rather than (as in the case of most of these situations) saying that the customer is donating through the business. In the first case, the business gets a deduction because it records these deductions as revenue and is making a donation out of that revenue. That's where we agree, but this is the exceptional case, not the norm. In the second case, which is the common case (i.e., round up for charity see for example https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-those-checkout-donations-0 https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-...), the business does not get a deduction for the donation, but also does not record these donated funds as revenue because it is only acting as a collections agent for a charity.

syzarian 4y ago

Edit: Misread what was intended.

Sohcahtoa82 4y ago
That's basically the point I'm making.
- deleted 4y ago
  [deleted]
- syzarian 4y ago
  When you write they deduct the $30 donation I thought you were meaning deduction on taxes. Your first paragraph is misleading. There is no tax write off since the money donated is not revenue and is not deducted in the tax sense. It’s just pass along money. The business can write off the expense of the accounting though.

deleted 4y ago

[deleted]

gamblor956 4y ago

> Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Businesses are not allowed to take charitable deductions for donations made using funds collected from customers for the stated purpose of donating funds to a charity (i.e., "round up for charity"). The money being donated is not the business' money to donate, ergo they are not the party making the donation and do not get the tax benefit of it. Technically, the customer gets the deduction, but for donations of a few bucks its not worth it for the business or the customer to bother with the donation receipt. Note that this does depend on the language of the solicitation. If they say "we'll donate" they can take the deduction, but they must also gross up their own revenue to include the "donated" funds, so they get no tax benefit.

Sohcahtoa82 4y ago
Did you read the rest of my message, or did you see that first line and stop there? We're in agreement.
- gamblor956 4y ago
  We're in partial agreement. I only agree to the extent that the business says that "we" will donate on the customer's behalf, rather than (as in the case of most of these situations) saying that the customer is donating through the business. In the first case, the business gets a deduction because it records these deductions as revenue and is making a donation out of that revenue. That's where we agree, but this is the exceptional case, not the norm. In the second case, which is the common case (i.e., round up for charity see for example https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-those-checkout-donations-0 https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-...), the business does not get a deduction for the donation, but also does not record these donated funds as revenue because it is only acting as a collections agent for a charity.