When you donate to a sports team, get the most out of your deduction. (Matthew_Hull/morguefile.com)
Q. I have a local pizzeria and local sports teams have asked me to make donations. They would put my logo on their shirts in exchange. Can I deduct whatever I give to them or do they have to be set up as a charity?
A. You've got some options.
You can look at your donation as either a charitable contribution or it could be considered a marketing expense, said Bernie Kiely. a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.
"If it is a charitable contribution then yes, the team has to be properly set up with the IRS as a legitimate charitable organization," he said.
The team may or may not be properly organized, so you'll need to ask that question.
If the money you give is a charitable contribution, you would get an itemized deduction on your federal income tax return, Kiely said. For New Jersey, you'd get no benefit because New Jersey does not allow charitable contributions to be deducted.
Outside of the deduction, consider the other benefits of giving and supporting a local team.
"You make a payment to the team. They put your pizzeria's logo on their shirts. The whole world sees what a great guy you are so they flock to your pizza shop. Sales break a new record!" Kiely said. "Sounds like a terrific promotional idea worthy of Madison Avenue."
Kiely said he would deduct it as a marketing expense."
That would mean you could save both federal and state income tax, and a little in self-employment taxes too, he said.
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com's weekly e-newsletter.