OT: Need advice on budget for tax write off

Sebaz wrote on 12/6/2008, 10:18 AM
I recently worked on a video project for the non-profit organization I work for, however this project was not part of my daily job for them, but something on the side that I decided to donate because of the way the economy is in right now and the fact that money is more than tight in our local chapter. I will, however, make sure to write this off in my taxes come February, but because I'm not a professional in this area I have no idea how much should I charge for all the work that I did. Even though I work for them as permanent staff, since this is not not part of that I will refer to them as the customer.

I will type a description of my work here and if some of you could tell me what is normally charged, or what you would charge for something like this, I would greatly appreciate it. I have to present a form to the organization a copy of which will be included with my taxes. Following is the overall description of my work for this event.

This was a big concert at a local venue, and also two other minor ceremonies the day before. Among other things my work included:

- Brainstorming about the layout and source material for the different videos needed to promote the concert, and to be shown to the concert attendees

- An estimated 50 hours of editing in Vegas over a month from the first drafts, showing them to the client, applying corrections as requested and replacing new source material as it was given to me, until the final videos were turned in to the customer.

- Video recording two people talking about issues related to the purpose of the concert, which took about 90 minutes for both, which were to be included on a video projected at the concert.

- Taking my workstation to the customer's location on two occasions because of time constraints that made that option more viable than the customer coming to my home office.

- Video recording of a ceremony that took about 90 minutes of my time

- Video recording of a concert the next day that took about 6 hours of my time

- Editing of both the ceremony and concert and for final delivery on DVD, an estimated 7 or 8 hours of added work.

- There were a total of three videos made:

1) One DVD that was sent to VIP guests as an invitation for an event prior to the main event,
2) One video which was to be put online, although at the last minute some disagreements between the customer and the artists' reps prevented it from approval by them, however the video was already produced,
3) One video that included two interviews video recorded by me as well as some editing of older footage provided to me by the organization, which was burned onto DVD and projected at the concert.

Any help on this would be much appreciated, not only because I need it for this but because I intend to this kind of work for a living and I don't know much about pricing of video recording and producing. If for whatever reason you would prefer to keep your price estimate private you can e-mail me at sebaz@live.com.


blink3times wrote on 12/6/2008, 10:43 AM
Forgive me, but the tax laws are quite different from Country to Country so you have to make it clear as to where you are.
Sebaz wrote on 12/6/2008, 11:49 AM
Oh. North Carolina, USA.
DGrob wrote on 12/6/2008, 2:17 PM
"In-kind" work for a 501c3 that employs you? You need to be very careful here and consult and acountant.

JackW wrote on 12/6/2008, 2:35 PM
And based on my accountant and attorney's advice, you can't deduct what you don't get paid for. We do a major pro bono project every year for a non-profit, which we would bill commercially at about ten thousand dollars. The only thing we've been able to deduct for tax purposes were unreimbursed out-of-pocket expenses -- e.g., tape, parking, lunch, etc.

Check with your accountant.

winrockpost wrote on 12/6/2008, 2:38 PM
very careful indeed,, especially since the work you did is not what you do for a living,, write it off what ? I'm not a tax attorney or accountant ,, but you need to see,one, or maybe you are one. But I don't see how my price or bubbas price for the job matters, since you don't do this type of work for money.
good luck
johnmeyer wrote on 12/6/2008, 3:20 PM
Boy, do I wish I could write off all my donated time. However, as others have said, I don't think you can do this. You definitely need to consult a CPA or lawyer.
video777 wrote on 12/6/2008, 5:19 PM
I've been told by my tax guy here in Oregon - That's a no-no. You can't write off something that is not an ACTUAL expense. Perhaps that's why it's called "charity" (aka generosity, kindness, etc.). Check in your state but I am fairly positive you will find the same to be true where you live.
Bob Greaves wrote on 12/6/2008, 5:27 PM
It is perfectly legal to consider it a charitable donation at a value that is reasonable in terms of the physical assets, however there are so many factors here that raise red flags that even if you were to prevail it might not be worth the possible trouble.

A charitable effort is not easily deductible but a charitable asset is. This is a bit of both.
Sebaz wrote on 12/6/2008, 7:09 PM
Well, I guess I'll post some of this in legal forums and see if somebody there can give me a clue. Other than that, I assume I could go to the local IRS building and see if somebody can guide me on that. Obviously I'm not going to pay a lawyer consultation fee on something that I donated, not only I don't have the money, but even if I had, it would be absurd.
Sebaz wrote on 12/6/2008, 7:12 PM
Oh, and I appreciate the replies on the tax thing itself, but if somebody can give me an idea of how much a small video company would charge for this I would really appreciate it so I can start informing myself better on this business.
TheHappyFriar wrote on 12/6/2008, 7:24 PM
IRS is very helpful in matters like this. A CPA might be better though. I'm lucky in that my brother almost has his CPA degree. :D
FrigidNDEditing wrote on 12/7/2008, 12:36 AM
I've been told in this same situation, that you don't get to write off services.

I've done a rather large project myself this year for an NPO myself (week long shoot in Chicago, traveling etc...etc...), and I was told that I cannot write off the work because I'm providing a service.

video777 wrote on 12/7/2008, 8:50 PM
A CPA or Tax Guy will be the best bet. They should know the tax law in your area. I highly recommend having a professional do your business taxes.
Avanti wrote on 12/8/2008, 9:18 AM

I've been a tax accountant for 30 years in the USA. As far as deducting the value of your "donated" labor.....forget it. That's a no no any way you package it and at any value. All you come away with is a warm and fuzzy feeling that you did something for free for the organization. If you have a video business and file tax returns for it you can claim the expense for any "consumable" items used on the donated job (like video tapes), just include those expenses with your other "paying" jobs expenses.

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Coursedesign wrote on 12/8/2008, 9:32 AM
...shouldn't he be able to claim mileage also?

(At the lower non-profit rate of course...)

video777 wrote on 12/8/2008, 11:37 AM
I have a sort of philosophical question: If someone does charity work (aka volunteers their time and services), is it really appropriate to be asking, "What can I get out of this?"

I'm one who looks for every legal and ethical tax advantage that I can but I don't see the point of doing charity work if it causes this much grief for a person. When I give my time and services I am doing it because I believe in the cause or there's some other compelling reason. The bottom line is: I'm doing it for free by choice and I don't expect anything in return from either the organization or the IRS or anyone else.
Sebaz wrote on 12/8/2008, 11:52 AM
You might have a good point, however, since I'm not precisely rich, more like the opposite, and every year I'm taken a colossal amount of money in various taxes from my salary, only to then having to pay even more to the IRS in February, then I don't feel any remorse about trying to get back at least a tiny bit of all that, of course as long as it's legal.

Now, if the money that's taken away from me in taxes was more fair, and the money was used responsibly, probably I wouldn't be so eager to find out if I can get something in return.

Of course having donated the service to them, which saved them from having to spend a lot of money on a professional video editor, makes me happy, but it's not them I'm trying to get something back from.

Now, I posted here and in Creative Cow, and someone there made me remember the term used by my organization for this kind of donation, which is "In Kind Donation", and that person said it is actually possible. Somehow it seems rather strange to me that a national NPO would have In Kind Donation forms where it shows to check either Products or Services in it if donating services was forbidden by the IRS. Today I'm home sick but I will check tomorrow when I go back to the office.
johnmeyer wrote on 12/8/2008, 12:16 PM
I have a sort of philosophical question: If someone does charity work (aka volunteers their time and services), is it really appropriate to be asking, "What can I get out of this?"That philosophical question has already been answered by your elected representatives. It is called the charitable deduction. While this doesn't cover Sebaz' donation of labor, it DOES cover donations of physical goods and, of course money. Every dollar you donate is subtracted from your reported income, prior to calculating your tax. If you are in the 45% marginal tax bracket (35% fed, plus 10.3% California, with no state deduction because of AMT), almost half of your donation is "free."

So whether you phrase the question in the selfish form of "what can I get out of this?" or in the altruistic form of "how can I do even more for my favorite charity?" you will find that in both cases, the tax code incentive makes a huge difference in how much money people are willing to give away.
earthrisers wrote on 12/8/2008, 5:02 PM
Yep... advice given several times above is correct.

You can't deduct the value of the services you provide to a nonprofit, unless you CHARGE for those services and then donate the money back.
...in which case, it's a "wash", and the tax benefits are nil, and there's really no point in going through those charge&donate-back motions.
video777 wrote on 12/8/2008, 9:50 PM
John, I'm not quite sure how you misintepreted what I was saying. Let me be crystal clear as to what I mean. If you volunteer/donate or in any way freely GIVE of your TIME or SERVICES then you can NOT deduct it from your taxes. No way, no how. However, I deduct the cost of every single DVD that I burn for charity and all of the ink and paper and DVD cases and I track all of my mileage. I still get the tax deduction for my dedicated office space (which is huge). Let's just say that I do understand how all this works (we got $12,000 back in taxes this year).

Bottom Line: It seems that the majority of people are in agreement here. Check with your tax specialist to learn for yourself. If money is tight then do jobs that pay. If you've been blessed with some extra, then by all means give to charity.