The IRS recently announced business taxpayers who make payments to charities or government entities and receive state or local tax credits can deduct those payments as business expenses.
The announcement came in response to taxpayer inquiries, and the IRS clarified that this general deduction rule is not affected by the recent notice of proposed rulemaking concerning the validity of a charitable contribution deduction for contributions pursuant to those programs.
The business expense deduction is available to any business taxpayer, whether or not they are a sole proprietor, partnership or corporation, provided the payment qualifies as an ordinary and necessary business expense.
That means companies generally can still deduct work-related payments in full as a business expense on their federal income tax return.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.