Charitable Contributions in a Self-Employed Business

Generally, for self-employed individuals, charitable contributions are not deductible on Schedule C as a business expense and can only be deducted as an itemized deduction on Schedule A. However, tax regulations state that transfers to a charity that are directly related to a taxpayer's business and are made with a “reasonable expectation of financial return commensurate with” the amount transferred may be deductible as a business expense. For example, if you pay a charitable organization to run an ad in their newsletter that is intended to generate new customers for your business, the cost of the ad would be an advertising expense, but not a charitable contribution expense.

You should contact this office if you have questionable contributions.

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