Our checkout collects donations for a charity. How do we keep them separate from our sales?
Customer Charity Donations in Business Deposits. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
By AE Tax Advisors Team · Updated October 28, 2026
Determine whether the business is collecting as an agent for the charity or receiving amounts on its own behalf. Track customer donations separately from sales and from contributions funded by the business itself.
A specific business-owner situation
A retailer offers a checkout donation option and transfers the collected money to a charity monthly. Processor deposits combine sales and donations. The company needs the collection agreement, customer disclosures and remittance record before claiming any charitable deduction.
Illustrative example, not a client result.
What to establish before filing
- Identify recipient rights and collection role.
- Reconcile donations collected, held and remitted.
- Separate company-funded gifts from customer funds.
Which fact changes the answer?
A customer charge collected for a named charity differs from the retailer donating a percentage of its own sales. The marketing promise and legal arrangement can change the accounting analysis.
A mistake to avoid
Claiming the customers' donated money as the company's own gift can misdescribe who made the contribution.
Records that support the decision
- Charity agreement.
- Checkout disclosures.
- Collection reports.
- Remittance confirmations.
The decision to document
Request an agency-or-company-payment conclusion and donation liability rollforward. Reconcile any processor reporting without silently removing genuine product sales from the tax return.
Business-owner tax planning and coordination · Discuss your business and advisory needs
Related questions
- Our new accounting system duplicated last year's bank activity. Where should we start the correction?
- We changed our reports to accrual accounting. Did we also change our tax method?
Sources and editorial context
General educational information prepared with AI assistance. No individual professional review is claimed. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.