Service Donations to Non-Prof = Tax deductions?

Macville

Macville

Well-known member
So I wanted to see if anyone here knows about giving non-profit's discounts and being able to take that off on my business taxes as a gift...

I do allot of work for non-profit's (mostly Churchs) and to help them afford my business's services I give them a 20% on the total. My question is, is there any way to count that as a gift to the non-profit on my taxes?

Thanks,

Matthew Rogers
 
No, I don't think so. The last time I checked, donation of profesional services is not a tax deduction. Too bad, as my wife and I have donated hundreds of hours of video work.

You can deduct the value of certain things though, like the DVDs you actually burn, tapes you use, and maybe even mileage (we consider that part of it a marketing expenxe, since it exposes our work to potential paying clients)

But you might want to check with an accountant.
 
I tried to do this
It came down to I would have to charge them
Then donate the money I charged them back to them.
BUT Then I have to pay the tax on the money I charged them then gave back. So I would end up doing the work AND paying the government tax on the pay I didn't get to spend. Now you would get a tax deduction for the full amount at the end of the year. But I'd rather just do the work for free than do the work and have it cost me too.
 
I've been around the bush with my CPA on this (operate as an s-corp in VA, and pay only half the SS tax that everyone else pays! Look into it!).

If you charge then give it all back, you definately have to pay income tax on what you charged. Thus your $100 doantion cost you $140. And, while you MAY get to claim the gift as a deduction, you also MUST claim the charge as income, so you're only breaking even back at zero. Plus, you may run into trouble with the taxman doing this... giving a donation when you KNOW that you will receive a benefit (such as the fact that you agreed to charge then give back) then you haven't REALLY made a donation at all, and you may get stuck paying taxes on the income, then NOT being able to take the deduction.
You MAY deduct the cost of any actual expenses (not time, just supplies). If you claim the work for your business, the mileage rate for 2007 is .485 cents per mile. If it is all just volunteer work, then the IRS allows .14 per mile for volunteer work.
By the way, at .485 cents per mile, you can't afford NOT to keep a mileage log and pay yourself for those miles. The money you pay yourself that way as 100% tax free! A simple trip of 50 miles, nets you almost $25, tax free.
For those of you on the fringe of actually diving in and making it a business, the mileage benefits alone pay for the cost of a simple business license, fifty times over. And consider incorporating as an S-corp. Those tax savings are worth hundreds of dollars annually. As a start, take your annual gross x .075. This is just a start in the world of savings if you incorporate.
 
You must log in or register to reply here.
Back
Top