Q: Can I offer a tax write-off form for my book drive customers when specific purchases go directly to charity?
I'm an author and have set up a book drive to benefit two specific, well-known charities. People can purchase the books at a discount from me, and then I will either ship or drive the books to the donation drop-off point. The buyers do not receive any physical items: they are purchasing for donation, but they receive a discount from me to incentivize purchase. I do make a profit with these purchases, but I do so with some loss from normal purchases to incentivize sales.
1) Because customers don't receive anything for their purchase, can I offer them a tax write-off form? Is there a minimum dollar amount they must invest? Where would I find the form, if so?
2) Because of the discounts (% off and the cost of shipping potentially), can I also write off the "losses" on my own business tax form?
I am located in Illinois. One charity is in Illinois and the other is national. Thank you!
A:
Regarding your questions about offering tax write-offs for your book drive:
1. Offering a tax write-off form to customers:
- As an individual author, you cannot directly offer tax write-off forms to your customers. Only qualified 501(c)(3) charitable organizations can provide donors with a tax-deductible receipt for their contributions.
- For your customers to claim a tax deduction, they would need to make the donation directly to the charity, not through a purchase from you.
- There is no specific minimum dollar amount for charitable contributions, but the customer must itemize their deductions on their tax return to claim the deduction.
2. Writing off your own "losses" on your business tax form:
- If you are selling books at a discount as part of your business, the discounted amount is not considered a loss for tax purposes. Instead, it is a reduction in your gross income.
- However, you may be able to deduct the cost of the books you donate to charity as a business expense. The books must be donated to a qualified 501(c)(3) organization, and you should keep records of the donation, including the fair market value of the books donated.
- Shipping costs for the donated books may also be deductible as a business expense if you are not reimbursed for these costs.
To ensure compliance with tax laws and to maximize your tax benefits, it's best to consult with a tax professional or accountant familiar with charitable contributions and business expenses. They can provide guidance specific to your situation and help you properly document your donations and expenses for tax purposes.
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