Goodsill Anderson Quinn & Stifel
20 July 2022
Goodsill Anderson Quinn & Stifel
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Most people barely understand the tax rules that apply to them
as individuals, so it is little surprise that corporate tax law
leaves many people feeling overwhelmed and confused. Even someone
who is confident about filing their personal income tax return with
modern software will need help when it comes to their company’s
taxes.
There are numerous significant differences between the rules
that apply to businesses and individuals for income tax purposes.
The applicable tax rates and the deductions available are among the
most significant differences between people and businesses when it
comes to tax liability.
Making the most of available write-offs can help companies limit
their tax liability. Charitable contributions are a popular form of
tax write-off for both people and companies. How much can a
corporation donate to charity and right off on its tax return?
Corporations can write off less of their income than
individuals
Charitable contributions are sometimes driven by a desire to
make a positive impact. Tax write-offs can help incentivize more
generous contributions. End-of-year contributions often have a
major impact on non-profit organizations, and the motive for those
last-minute gifts is almost always to get a tax break.
An individual filing a tax return can potentially make
charitable contributions that offset 100% of their personal income
tax liability. The same approach does not work for a corporation.
The Internal Revenue Service (IRS) limits tax-deductible corporate giving to 25%
of the company’s reported revenue. While the business can
certainly make more contributions than that, it will not receive
the tax benefits that an individual would for those
contributions.
Making sense of business tax laws will help you minimize your
company’s liabilities and maximize the revenue it generates.
Having experienced legal guidance is important.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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