cancel
Showing results for 
Search instead for 
Did you mean: 
giannibyte
Level 2

Charitable contributions

Hello all, I need to record a non-cash charitable contribution. In other words we provide service to a church and we want to record the value of this service ($80) as charitable since we don't really bill them. Thanks in advance.

Solved
Best answer January 12, 2022

Best Answers
Rainflurry
Level 8

Charitable contributions

@giannibyte 

 

If the value of the contribution is built into your employee's salary, the salary paid to that employee for providing the service is your charitable contribution.  There's nothing else to do.

 

You cannot deduct the value of a service as a charitable contribution and also deduct the same pay to that employee for the same time spent on the contribution.  You would be deducting $2 for every $1 spent to pay your employee.  Does that makes sense?  This is also why you're unable to get this to work in QB because you have no reduction in assets - you haven't given anything for this "contribution".

 

Also, the IRS is very clear that you cannot deduct the value of a service provided as a charitable contribution.

View solution in original post

10 Comments 10
AileneA
QuickBooks Team

Charitable contributions

Hello, giannibyte. 

 

When you make donations or charitable contributions, how you record them depends on the type of donation you've made. For non-cash charitable contribution, First, you must create an invoice in QuickBooks Desktop. 

 

Once done, create an account to use to record charitable contributions from your Chart of Accounts. The next step is to create a product item for donations. From here, issue a credit memo for the value of your donation.

 

To create an invoice: 

 

  1. Go to the Customers menu and choose Create Invoices.
  2. From the Customer: Job drop-down, select a customer or customer job. If the customer or job is not on the list yet, you can select Add New.
  3. Add all the necessary information.
  4. Select Save & Close.

 

To create an account to use to record donations: 

 

  1. Go to Lists menu and select Chart of Accounts.
  2. Click the Account drop-down arrow at the bottom of the window and click New.
  3. Set Expenses as the Account Type and click on Continue.
  4. Enter a Name for the account.
  5. Click Save & Close.

 

You can also consult an accountant to get advised what account to use when creating this account. 

 

 

To create a product/service item for the donation: 

 

  1. Go to List at the top menu bar and select Item List.
  2. Click the arrow beside Item and choose New.
  3. Under Type, select Inventory Part.
  4. Use the account you've created from the drop-down list in the Income account field.
  5. Add the needed details.
  6. Click OK.

 

To issue a credit memo for the value of the products you're donating: 

 

  1. Select Customers and then click on Create Credit Memos/Refunds.
  2. Enter the info for the credit memo or refund. 
  3. Click on Save & Close once you're done. 

 

Check these articles for more information:  

 

 

If you have any further questions, don't hesitate to ask. Thanks for being part of the QuickBooks family. Have a splendid week!

giannibyte
Level 2

Charitable contributions

Hello AileneA, thanks for your response. I did everything you instructed. My question is: when I run a report the account for Charitable contribution has zero balance because the credit memo "paid" out the invoice. How then we can keep track of the amount if is not showing in P&L and Trial?

Mark_R
QuickBooks Team

Charitable contributions

Welcome back, @giannibyte.

 

Allow me to provide additional information and help you show the balance of your charitable contribution in the Profit and Loss report.

 

The balance for your charitable contribution should show even after applying the credit memo to the invoice. Since it doesn't show in the Profit and Loss or Trial Balance report, you'll want to make sure the reporting period is correct. Here's how:

 

  1. Open the Profit and Loss or Trial Balance report.
  2. From the Dates drop-down, select the date range when the transactions are made.
  3. Click Refresh.

 

If you get the same result, you'll have to review the credit memo and make sure the charitable contribution item was selected.

 

As always, you can visit our QuickBooks Community help website if you need tips and related articles in the future.

 

Our doors are always open to help you again if you need further assistance recording charitable contributions. I'll always be here to help, @giannibyte.

Rainflurry
Level 8

Charitable contributions

The value of the service provided cannot have any markup to it.  Therefore, the only deduction is whatever actual costs you incur to provide the service.  For example, if it costs you $40 in labor to provide the service, the $40 paid to the employee is your charitable contribution.  You cannot deduct $80 for something that only cost you $40.

giannibyte
Level 2

Charitable contributions

Hi Mark, thanks for your reply.

Maybe I'm doing something wrong, but even if I change the date like you said the report is showing 0. When I double click on the line I get all the transactions. These are the steps I did:

Create an invoice for the recipient of the donation (Church) for $80 with an item connected to Charitable contributions account. Then I issued a credit to the Church for $80 and applied to that same invoice.

What I finally get is a washout and I don't know how at the end of the year we can possibly get a total of all these charges that we pick up from time to time. Thanks again.

 

Report01.JPG

giannibyte
Level 2

Charitable contributions

Hi, I'm actually not applying any markup, the value of the contribution is determined by the hours spend to do the job and the hourly rate, but the employee who does the job has a fixed salary, so that value is built in that employee salary. Thanks for the response.

AbegailS_
QuickBooks Team

Charitable contributions

Hi there, @giannibyte

 

I appreciate you for providing details about your concern. 

 

QuickBooks report generates all accounts that include activities. You'll want to pull up two reports and export them to Excel. Let me guide you through the process.

 

While zero balance items are still showing on the P&L report, you can export it to Excel. Then, remove those items from there.

 

Let me show you how:

  1. Go to Reports, then type Transaction Detail by Account.
  2. Select Customize and Filter.
  3. Mark the Distribution Account box, then choose All Income/Expense Accounts.
  4. Click Run report. Make sure to change the Report period to your  desired report date.
  5. Hover towards the Export icon. Then, Export to Excel.

 

Then, pull up the account list report and export it to Excel. Here's how:

  1. Go to Reports, then type Account List.
  2. Select the Export icon beside the Printer icon.
  3. Click Export to Excel.

 

Once done, you can then compare which accounts have zero balance with no activity. You also have the option to delete or merge rows and columns in your Excel.

 

To learn more about the solution above, check this out: Export reports as Excel workbooks in QuickBooks Desktop. This article will also help you get updated reports while working in Excel.

 

 To learn more about running and customizing reports in QBDT, you may check these articles:  

 

You can check the damaged transactions/s shown in QBWin.log and apply the solution once it finds an issue. 

 

Don't hesitate to leave a comment below if you have any other questions about the report. Have a good one. 

Rainflurry
Level 8

Charitable contributions

@giannibyte 

 

If the value of the contribution is built into your employee's salary, the salary paid to that employee for providing the service is your charitable contribution.  There's nothing else to do.

 

You cannot deduct the value of a service as a charitable contribution and also deduct the same pay to that employee for the same time spent on the contribution.  You would be deducting $2 for every $1 spent to pay your employee.  Does that makes sense?  This is also why you're unable to get this to work in QB because you have no reduction in assets - you haven't given anything for this "contribution".

 

Also, the IRS is very clear that you cannot deduct the value of a service provided as a charitable contribution.

giannibyte
Level 2

Charitable contributions

Thank you that’s what I tough too. 

FritzF
Moderator

Charitable contributions

Hi there @Rainflurry,

 

Thank you for always sharing your inputs to help address other members concern.

 

Keep safe and have a good one.

Need to get in touch?

Contact us
Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up