There is a coin shortage because the stores are having trouble getting them. If they didn’t have to give them to people, there wouldn’t be a coin shortage.
Bringing them to the bank/coinstar machines is not “spending coins.”
150 years ago a penny was worth 30 times what it is now and there wasn’t a smaller denomination. It was worth fishing out of your pocket and spending
Is there a coin shortage or are people avoiding touching coins as much as they can?
That’s not what’s being described here. This is the "your meal is $11.24, but I’m going to charge you $12 and pass the $0.76 along to my charity. It’s part of the main transaction, it’s on the receipt, and it is not you giving to a 501( c)(3). You’re giving the money directly to the retailer. The transaction shows on your credit cards statement as “$12 to Company X”, not “$11.24 to Company X and 0.76 to Charity Y”.
That means it’s income to the business. You can’t deduct it. The company sweeps it into their foundation and donates it and releases a press release. This is a totally distinct operation from the jar or kiosk where you’re actually, theoretically anyways, giving directly to the charity via a collection box.
Then it’s not a donation that the store can write off either. If a store has $100 in a donation bucket and they want to claim that as a donation, they can write a check for $100 to the charity. That covers the donation portion of it. But what do they record it as when they deposit the money into their bank account, if not income?
I know it’s not income in the traditional sense of selling something and getting money from a customer, but it’s still money they’ve received and it has to make it’s way onto the books somehow. I’m not sure how that would be done, from an accounting perspective (legally anyway, there are other way, but that gets into embezzling), other than to call it income.
No, but it gets the coins into circulation. It doesn’t matter of someone takes them to a coinstar machine, deposits them into their bank account or uses them at a store. What’s important is that they’re not sitting in a jar unused.
There’s a coin shortage because people aren’t using them.
I’m more than aware of that, but you said “Why would you want to give a big ass corporation a tax write off that didn’t even come out of their own profit”. My point was that, while you’re giving the company a write off, it’s also income for them, so it’s a wash.
(FWIW, I’ve been doing bookkeeping at a small business for 20ish years, this is what I do every day).
I would assume it’s just like how they report state sales tax. It’s not income to them, it’s passed right through. It’s not income.
@Joey_P, I understand your point now. In raw terms, yes…it’s a wash, assuming the accounting is on the up and up. But it doesn’t change the fact that you’re basically funding the company’s charity, and all the good PR it generates, instead of benefiting from a cash donation yourself.
Kinda, yeah. I mean, it’s not income in the end, but when we count all the money in the register, the sales tax is in there with it, then we deduct it back out.
Similarly, if we collected donations like that, it would be counted with the rest of the money, and deducted back out.
In both cases, the sales tax we collect and the (hypothetical) donations we collect are recorded as income and written off as expenses (or donations). Depending on how you do your books, it may or may not show up as income on your financial statements.
But again, my point is that if you give a store $5.00 to donate towards their pet cause, they don’t ONLY get the write off.
With double entry accounting, everything has to be entered in two places. If you enter a donation for $5.00, that same $5.00 has to be entered somewhere else or your balance sheet won’t balance.
[IRS-qualified] enrolled agent Rick Florez who says that as long as you have a receipt the donation is eventually going to a recognized organization then you get the write-off. From https://kutv.com/news/get-gephardt/good-question-who-gets-your-check-out-charity-tax-write-offs
No one else can take a write-off that you’ve paid.
You need to talk to your CPA then, because it is not income. I guarantee your financials don’t include sales tax as income.
Yes, that’s 100% true, the company absolutely gets the PR, no argument there. A few years back a lot of local businesses put collection boxes out for the family of a fallen officer. We were all amazed that we ended up with something like $5000 in the course of a month and, yes, we did mention it on facebook (giving credit to the customers, we didn’t suggest it was ‘our’ money being donated).
People could have individually donated had they wanted to. But when you’re at a store with the collection box out, it’s a whole lot easier to toss some money in there than it is to make a trip to the bank where the family set up an account.
I’m always surprised at how fast those boxes fill up. Put a VA bucket out and there’s a $50 in there every week. We had one for a dog rescue that was filling up so fast the rescue people couldn’t believe it. In fact, she said most of her donation buckets barely covered the gas to go pick them up and ours was doing a few hundred a month. I guess people like helping dobermans in need of rescuing.
If you shop every day of the year and donate the change every time, we’re talking about roughly $180 (assuming the change averages fifty cents). And you need to save all of those receipts. Is anyone seriously going to claim this deduction?
Of course not. But neither can the store, which was the original accusation.
Sadly, since the tax overhaul, I get no write-off for donations anymore, and neither do most people I know. I have no quibble with supermarkets partnering with charities for the “goodwill” it fosters.
Which is why I said " it’s not income in the end, but when we count all the money in the register, the sales tax is in there with it, then we deduct it back out."
For example, (making up numbers), I count $5000 in the register and enter that as income. Then I make a journal entry to move the $50 in sales tax from income to the sales tax account. My actual income on my P&L statement will show $4500. This would be the same if we were talking about donated money.
If that’s not how you do it, how then?
If I collect $100 in donations that’s going to go to some charity, what are the two entries? One of them is the deposit into the bank account, but what’s the other? The way I do it, it goes into an income account. A journal entry then moves it to a donation account. That’s a wash.
I can deposit it directly into a ‘donation’ account and write the check from there, but that means that account sees +100 and -100, again, a wash.
As for my CPA, we’ve been doing sales tax this way for 40 years now, of the 4 accounts we’ve worked with (including one large accounting firm), no one has had an issue with it.
What I’m saying is that the donation should not be yours to write off. It’s not accounted for as your income. You don’t get the write-off.
I’ll go back to my previous question. I assume we can agree that if I’m to write the charity a check, I have to deposit the money into my bank account.
From an accounting POV, how do I get that money on books so I can reconcile my bank account and write the check?
If it’s not to a 501c3…it’s not a donation you can write off. The “round up my transaction” does not come with a receipt from a 501c3. You conveniently ignored this caveat.
I would assume that when a supermarket rings up the donation, it’s coded as a pass-through charitable account similar to escrow. Your cash registers may not have that capability.
If that money you collected for the family of the fallen officer had to go into a bank at night, you wouldn’t consider it income.
We wrote a check to the bank. Which [bookkeeping] accounts should I use to handle that?
I have no quarrel with the collection boxes…except that you’re trusting that the store owner isn’t using it as a tip jar, which happens a lot. My issue is with the places rounding up the mostly credit card purchases and putting that money in the register, to be collected by MegaCorp HQ, and sent in a big check to some charity partner. They don’t need your help, if they were philanthropic they’d just write a check without rattling the cup when you’re trying to check out.
Ask your CPA. It should be some kind of holding account such as an escrow payable account that your mortgage company uses. Separate from revenue.