Pro Bono
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- gramme
I read somewhere recently that pro bono work isn't tax deductible. Is that true everywhere in the U.S.?
Now, charitable donations are obviously tax-deductible. So what would prevent a designer from claiming pro bono work done for nonprofits as charitable donations? The way I see it, there's a vocational sacrifice involved, i.e. the donation of otherwise billable hours; and if it's a nonprofit in the habit of receiving donations, then why can't design work be considered a donation of work in trade, written off for the value of the work?
- ernexbcn0
I came here looking for some U2 news
- utopian0
I should receive a tax-deductible for all the BS I post on QBN.
- gramme0
|:|
- lumedia0
Solution: Bill them, then send the money back as a charitable donation.
- duckofrubber0
You need to get a letter from the non-profit that acknowledges your donation with dollar amount in order to claim it as a proper deduction.
- nosaj0
You aren't being taxed for the time you aren't billing for - what are you looking to have tax-deductible?
- gramme0
@ duck... yeah I've gotten one letter from a recently completed nonprofit job. Just wasn't sure if I can actually claim a charitable donation deduction.
@ nosaj, I'd be looking for a deduction for charitable donation, not for unbillable time per se.
- johndiggity0
pro-bono to a 503c organization = tax deductable
pro-bono to a for profit (non 503c) = free work
- nosaj0
Say you made $50,000 in a year and contributed another $50,000 of your time to a charity and you were able to claim pro bono work done for nonprofits as charitable donations you would not pay any income tax at all.
If you made $50,000 in a year and contributed $50,000 cash to a charity you would have no income to tax - thus a $50,000 tax deduction.
- scarabin0
AIGA on only charging tax for goods, not services:
- bzsaw0
Consult a CPA in your state for the details. In Oregon you cannot write off work unless there was a transaction. I actually had to charge the non-profit and then donate the money back to show the donation.
I know, it doesn't make any sense.
- lukus_W0
I'm very much anti Bono.
- gramme0
bzsaw, how exactly did you go about that? Did you invoice them and then as a line item discount your entire fee?
BTW there are two specific clients in question. Both are various kinds of registered nonprofit. One's pro bono, the other is drastically discounted. The latter has already given me an official letter recognizing the amount of discount.
I do understand the difference in working for those kinds of business vs. just giving it away to a for-profit.
- gramme0
quick bump for bzsaw...
Did they pay you the full amount before you refunded it?
- ethanfink0
I asked my accountant in NY, he said no-can-do...
The getting paid, then donating idea though sounds legit :)
- nosaj0
What could you gain by getting paid then donating it back? Sure that amount would be tax-deductable but your taxable income was also that much more. It would be a wash, no different then not charging to begin with.
- lukus_W0
If you weren't paid - how on earth can you pay tax in the first place?
- gramme0
lukus, maybe I'm thinking of this in too simplistic terms, but when I give money to my church, I get a tax deduction for it. So the idea is that I donated X work which is worth X dollars. It's time that could ostensibly be spent doing paid work, i.e. it could be seen as a donation.
What nosaj says makes sense though, about getting paid and then donating it. I think. I'm horrible at algebra. Also, it's Friday and I'm still working. Mind = fried.