OT: Need advice on budget for tax write off

[Terence Curren]

[Mark Suszko] “Now, the rules are different in every state, but when you make a campaign donation in Illinois, it is recorded and reported as public information”

Money or property you give to “Political groups or candidates for public office” Is also NOT deductible per IRS publication 526.

Terence Curren
http://www.alphadogs.tv
http://www.digitalservicestation.com
Burbank,Ca

[Steve Boultbee]

“In-kind” simply means “non-cash” which can be goods or services. However, that doesn’t change the fact that services are not deductible as a charitable contribution, as has been mentioned several times. One previous poster linked to an IRS publication that confirmed this. Its authority is Treasury Regulation §1.170A-1(g):

g) Contributions of services. –No deduction is allowable under section 170 for a contribution of services. However, unreimbursed expenditures made incident to the rendition of services to an organization contributions to which are deductible may constitute a deductible contribution. For example, the cost of a uniform without general utility which is required to be worn in performing donated services is deductible. Similarly, out-of-pocket transportation expenses necessarily incurred in performing donated services are deductible. Reasonable expenditures for meals and lodging necessarily incurred while away from home in the course of performing donated services also are deductible. For the purposes of this paragraph, the phrase “while away from home” has the same meaning as that phrase is used for purposes of section 162 and the regulations thereunder.

Anything you paid for out of pocket to produce these videos for the organization is a possible charitable deduction, subject to the following paragraph.

You mention in your original post that you’re doing this work for your employer who’s a not-for-profit entity. You didn’t mention what type of not-for-profit entity they are. That’s critical to determining whether you have any contributions that are deductible. If your organization is exempt under 501(c)(3), you can deduct contributions made to that organization. If they’re exempt under a different paragraph of 501(c), your contributions will generally not be deductible.

In addition, you’re required to have contemporaneous documentation to support your deductions, regardless of how little they are. The old $250 limit is no more. This could be a letter from the organization, canceled checks, etc. Of course, the organization can’t give you a letter stating that the value of your services is deductible, as that would be erroneous.

I’d recommend that you see if you can get reimbursed by the organization for your out-of-pocket costs. You’re much better off with that than you are with taking a charitable deduction, since the charitable deduction will only get you a tax savings of about 30 – 40 cents for every dollar you spend, depending on your federal and state tax rates.

I’m interested to see what this form is that they asked you to fill out. There are accounting standards that require the organization to recognize donated services as revenue (with a corresponding expense) if those donated services meet certain criteria. Perhaps they’re trying to establish how much your services were worth for that purpose. That still wouldn’t explain why they told you that your services were tax deductible, though.

Hopefully, by establishing a value for the products you produced, you’ll be able to show the organization just how much you saved them by doing this work on your own time. Maybe in the future when they need a similar service, they’ll come to you again and you’ll be able to get some compensation for your time, especially if they’re happy with your work and your rates are less than what they’d have to pay an outside source.