First, organizations can deduct the value of charitable donations from taxable income. Before attempting to take the deduction, ensure that the charity has an approved charitable organization designation. Claiming a tax-deductible gift is valid when donations go to IRS-approved 501(c) (3) entities. In addition, verify possible donation levels since they vary based on adjusted gross income (AGI).
It's possible to deduct up to 60 percent of a business's AGI. However, gifts and non-cash deductions have caps at 20 percent to 50 percent of the taxpayer's adjusted gross income. Nonetheless, companies lower their taxable liabilities when they make donations.
Sponsoring charitable events exposes companies to new potential customers. Additionally, organizations attract goodwill through philanthropic initiatives. Moreover, it's possible to deduct sponsorships in many cases.
Lastly, organizations can deduct the costs associated with volunteering. While IRS rules do not allow deductions for the time or service, the expenses incurred during the volunteer work count as tax-deductible donations.