Plus, John Cetra of CetraRuddy weighs in on ways to give back other than just donating money.
While year-end giving can be a gesture of goodwill, it can also be a crucial part of reducing the tax burden associated with running a business. Here are some considerations for design practitioners to best direct their charitable intentions.
What—and How Much—You Can Deduct
To qualify for tax deductions on charitable giving, organizations and individuals must make their donations by Dec. 31. But before tallying up every philanthropic gesture, architecture firms should be aware that not all giving qualifies for a deduction, which may affect how much a firm chooses to donate.
For design firms that are classified as C corporations, the revenue of the business is taxed separately from that of its owners. Tax laws limit deductible donations from these entities to 10 percent of taxable income of the entire business, says Joe Schneid, a certified public accountant partner at Aldrich CPAs + Advisors, in Portland, Ore.
Direct giving, be it in the form of cash or property, is the best way to take advantage of the 10-percent deduction allowance. However, Schneid says this form of charitable giving is relatively uncommon: “Most architecture firms are operating on a cash basis, only paying tax when they collect receipts. They tend to try to keep their taxable income low each year by paying out bonuses.” That can mean they leave less money for charitable giving.
Donated services, such as pro bono design work or volunteering with nonprofits such as Habitat for Humanity, do not qualify for deductions. But, Schneid says, “if you volunteer a day of time or if you have a couple of your staff members work on a project, you can still deduct it as overhead,” referring to expenses incurred during the donation of those services, such as the cost of supplies or travel.
Read more HERE >>>> Source: Architect Magazine http://www.architectmagazine.com/practice/end-of-year-giving-tips-for-architecture-firms_o