"He who marches out of step hears another drum." ~ Ken Kesey
Frog is correct, the whole write off thing is a myth.
Quote from: ZooCity on February 22, 2013, 12:41:09 PMFrog is correct, the whole write off thing is a myth.Non profits are a full write off, that is what they told me. Are you saying the $10,000 in non profit work I did this year will not come off what I owe the government?
Quote from: Jon on February 22, 2013, 01:04:42 PMQuote from: ZooCity on February 22, 2013, 12:41:09 PMFrog is correct, the whole write off thing is a myth.Non profits are a full write off, that is what they told me. Are you saying the $10,000 in non profit work I did this year will not come off what I owe the government?I am saying that or, rather, Uncle Sam is. When doing work for a charitable and recording the "value" for tax purposes:You can never use any labor as part of this value. You have already expensed your materialsTotal value of your donation in terms of tax deduction = 0Toss in the fact that entities such as an S-Corp can't even deduct charitables (they pass through to owners if any do occur) and you can see how much of this is just a myth. The reality is that you can file your charitable contributions for actual items you donate (minus depreciation and such of course) or cash. A % of that adjusted amount will apply against your taxes for that year. I've looked for every possible way around this, it just won't happen. The justification from the IRS (and I guess a fair one) is that you could make up some ludicrous value for your services and abuse this. One thing you could try is to invoice the NPO, have them pay in full and then donate cash back to them. It will not help your corporation at all since you now have income for the full invoice amount and the profit inherent with that income but it could benefit you personally in an S-corp scenario where you are the sole shareholder. Again, if you donate $x to an NPO only an adjusted % is taken off your taxes. It's a huge, huge misconception that business can write this off and a total bummer for us businesses that donate heavily.
We actually do that in NP work, probably more, annually in the form of in-kind donations of product+services so I feel pretty disenfranchised with the tax setup on this. Our town is not only full of legitimate NPOs but I personally want to support many of their missions.