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Provision Business Services LLC

A Professional Bookkeeping Firm

Located in Albuquerque, Serving all of New Mexico

505-269-3783

Congratulations for being charitable.  Contrary to what many think, charitable contributions are not a deductible business expense.  They are deducted on your personal tax return, the 1040.  Because of this, charitable contributions should ideally be made from a personal account rather than a business account.

If you do make a charitable contribution from a business account, it should be treated as a distribution or draw.  I like to create a sub-account just for charitable contributions so that at year end, I have a number readily available.

A few points about what is a deductible charitable contribution.  To be deductible, the organization you are contributing to should be a non-profit 501c3 organization.  The organization should also send you a letter stating the amount of the donation and that they are a 501c3 organization.  You need to keep these letters to document your contribution.  Donations to political candidates and organizations are not deductible.