Just like other delicious cookies, Girl Scout cookies are yummy. But are they really tax-deductible? Well! That’s the focus of this discussion; stay tuned!
As you can’t eat your cake and still have it, the same thing is applicable to Girl Scout cookies; hence, the answer to this pressing question can be yes or no, depending on the intention you have for buying the cookies from the Scouts.
If you purchase cookies from Girl Scouts for personal consumption, they may not be tax-deductible, but if you buy the cookies and donate them to a charitable organization, they may qualify for tax-deductibility. For detailed information on the Internal Revenue Service’s (IRS) stance on charitable contribution and tax-deductibility, keep a tab with me as we delve deep into our discussion.
What is a Tax-Deductible Expense?
Tax-deductible expenses are those legal deductions made from your overall financial profits.
Generally, tax-deductible expenditures reduce the gross profit you make from your business. And as a business owner who runs a profitable business, you’re obliged to pay your tax to the Internal Revenue Service (IRS).
However, if you make a donation to a charitable organization like Girsl Scout without demanding anything in return, such a donation is tax-deductible. But if you donate to a charitable organization and receive goods or services in return, such a donation is not tax-deductible.
Who Are the Girl Scouts?
While girl scouts prepare girls for leadership, self-reliance, and entrepreneurship, you may have seen some of them in strategic places selling palatable cookies to fund the charity organization.
It is an established fact that the Girl Scouts of the United States sell delicious cookies to raise funds to cover their essential expenses, like summer camp expenditures, troop activities, vital projects, and adult volunteer training.
The funds raised by Girl Scouts can be divided into the following sections:
- About 50% of the fund raised are used to sponsor the organization’s projects, training, scholarships, events, etc.
- Around 24% of their fund is used to pay for the cost of cookies
- 23% of the money goes to girl recognitions, service unit bonuses, and troop proceeds.
- While the remaining 3% will be recycled back to support their program and pay for additional cookies too.
Charitable Contributions and Tax Deductions
In the United States, it is a primary norm that the Internal Revenue Service (IRS) allows taxpayers to deduct certain charitable contributions from their taxable income.
However, the IRS stated clearly that for a contribution to be eligible for a tax deduction, it must meet specific criteria. According to the IRS, the recipient organization must meet the criteria of non-profit organization as stated in Section 501(c)(3) of the IRS Act, and the contribution must be made without the expectation of receiving something substantial in return from the organization.
Are Girl Scout Cookies Tax Deductible?
The answer to this question is both yes and no, depending on the context in which the donation was made.
According to the Girls Scouts rule, if you buy the cookies for personal consumption, they are not tax-deductible since you have received fair market value and utility for your money. Hence, there is nothing to be deducted.
Meanwhile, if you bought the cookies from the Girl Scouts and left them for the Scout as a form of donation, that’s a charitable donation, and it is tax deductible. If you have patronized Girls Scout before, you would notice that they normally ask their customers to buy some boxes of cookies and leave them so that it would benefit military personnel.
In their words, Girl Scouts say, “Customers not receiving Girl Scout cookies don’t benefit directly from paying for them, so those individuals may treat the purchase price of the donated cookies as a charitable contribution.”
On the other hand, if you purchase cookies from Girl Scouts and donate them to another charitable organization, that will also be tax-deductible since you didn’t get a fair market value for them.
According to the IRS, if you make a donation to a charitable organization, ensure that you receive a receipt containing the following details:
- Name of the organization
- Amount donated
- Date the donation was made.
Additionally, the IRS also revealed that if you buy up to 63 boxes of cookies worth $250 or more, you should get a written acknowledgement from the charity organization describing the exact amount donated and a comprehensive description of the cash or property donated.
Popular Cookies Sold by Girl Scouts
Some of the popular cookies sold by the Scouts include:
- Thin Mints
- Samoas
- Do-si-dos
- Shortbread
- Trefoils
- Caramel deLites
- Peanut Butter Patties
- Tagalongs
- Peanut Butter Sandwich
- Lemon-Ups
Conclusion
Cookies purchased from Girl Scouts for personal consumption are not tax-deductible, while those bought with the aim of giving back to the charity organization are tax-deductible.
However, whenever you buy cookies from Scouts and donate them back to the organization, ensure that you get a receipt from them that you will present to the IRS should the need arise.
