Tax Write-off and donated labor

[John Paul Sanborn]

I went to the accountant for taxes today. Since the issue came up here before, I asked him what the procedure was for donated labor to a non profit organization.

You must bill the NPO for the labor, then do the paperwork for a manetary donation of equal amount as the billing. Claim the labor as income and enter the donation to the schedule whatever.

He said in the longrun your better off just doing the work and forgetting about it. For me it would have bumped me up to a higher tax bracket too.

 

[treeslayer]

I do volunteer tree work for Habitiat for Humanity, and I just eat it. I get some advertising, and all the logs ($$$$), so it works out.
Plus the best good deed is the one only you and the recipient know about.:angel:

 

[John Paul Sanborn]

I've been doing work for a few churchs for years. i get a few jobs out of it, but not a whole lot. They're all the small ones without the rich parishoners. Last year I logge a few hundered hours though on big trees and thought it worth looking into

 

[Newfie]

I'm not an accountant but...

I would be looking for a new one if I were you JPS.

Publication 526 (charitable contributions) clearly states that donations of labor and services are NOT deductible. Certain expenses related to the service may be but are subject to certain limits.

Your accountant seems to have proposed some not so "clever" accounting in order to "make" it qualify. But all his idea does is shift things around on the balance sheet by fraudulently billing the charitable organization and claiming that they actually paid you and then asking them to provide you with verification of a cash donation for the amount billed. Three acts of tax fraud that puts you on the hook for the additional tax liability from being pushed into a higher tax bracket. I can't see any advantages, even if the shuffling of money actually takes place.

I may have missed something but it seems odd to me.

 

[John Paul Sanborn]

I think that the gist of the conversation was that the transaction would be a wash if done that way.

How is it a fraud if I bill them they pay me and I return the money? I would not want to do that anyways.

 

[Newfie]

Well, if the transactions actually took place it wouldn't be fraud at all. But you are right, best case everything comes out a wash.

I think I was possibly the victim of early morning sleep deprived posting. Last time I chaperone a sleep-over birthday party for 8 seven year olds.

I would definitlely keep track of your expenses though, when working on those jobs, but I'm sure you already do that as a regular business routine.

I knew I must have missed something.