Like other community groups, Little League teams are happy to have sponsors. Whether you're giving out of the goodness of your heart or because you want the youngsters running around with your business's name on the backs of their jerseys, you might also be in for a reward from Uncle Sam on your taxes.
When you sponsor a Little League team, getting your name on the back of the jerseys turns your good deed into an advertising expense. Instead of the money being simply a donation to a nonprofit organization, you're getting something in return for your business: public exposure. As those little ones run around the field, all the other players and parents get to see "Joe's Pizza" as they're debating where to eat after the game, or "Ann's Sports Injury Therapy" when their little one hobbles over after twisting her ankle sliding into second base.
Advantages Over Donations
Using a sponsorship rather than a charitable donation to the league means you get to write off the costs as a business expense rather than a charitable donation. When you work as a sole proprietor or partner, that means the costs come out of your business income, which means lowering your self-employment taxes as well as your income taxes. Charitable donations only lower your income taxes and they're only available if you itemize your deductions.
If, on the other hand, you're donating out of the goodness of your heart and not receiving anything in return, most Little Leagues are nonprofit organizations eligible to receive tax-deductible contributions. So, it does qualify as a charitable contribution on your taxes. However, don't include any registration fees or equipment costs for your own child, because you're receiving benefits in return -- your kid is allowed to play -- which means it's not a charitable contribution. For example, say the annual registration fee is $75 per player, but you know that some families simply can't afford that so you pay the $75 for your kid and then donate another $150 to the Little League. The $150 extra is deductible on your personal income tax return.
If you're claiming a business expense, it goes on Schedule C, line 8, as an advertising expense. This reduces your business income on the form. Since only your net profit carries over to your income tax return, there's no need to deduct it again on your Form 1040. If you're claiming a charitable contribution, that goes on line 16 of Schedule A, the list of itemized deductions. It gets combined with your other itemized deductions for the year and replaces your standard deduction on line 40 of Form 1040.