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Donating time/copyrights to Non-Profit Charity - how to d...
  
 
eric chang
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p.1 #1 · p.1 #1 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Hey guys,

new situation for me..

I'm donating a few hours of my day to shoot a charity 5K for a cause I'm pretty close to. This will also include rights to the pictures.

Have any of you guys done something like this before? How would you draw up an invoice? Draw it up normally for an event, then zero it out at the end?

I should be able to use this as a donation to charity I preume.

Thanks!



Mar 05, 2014 at 05:17 PM
FLSTCSAM
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p.1 #2 · p.1 #2 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


The last time I looked into this the only thing you can write off are "actual" material costs, no labor, creative fees etc.

Just shoot it and include your costs for gas and parking in your tax return.

Sam



Mar 05, 2014 at 09:09 PM
colinm
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p.1 #3 · p.1 #3 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Sam's right and the IRS is very aggressive in enforcing this rule. You can deduct only out-of-pocket expenses. Reason being, of course, that everyone would otherwise just invent an outrageously huge invoice and zero out their tax liability.

If you rent equipment (from a third-party rental house, not from yourself), you can deduct that. If you make prints, you can deduct the lab cost or the actual, documentable cost of your own raw materials. Your time has no value and the rights have no value.

That being said, a zeroed invoice is a fine way to illustrate the value of your services to the client.



Mar 05, 2014 at 10:30 PM
eric chang
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p.1 #4 · p.1 #4 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


very good to know. Thanks guys!


Mar 06, 2014 at 11:21 AM
Bernie
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p.1 #5 · p.1 #5 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Normally you can only deduct actual costs as noted above. You might be able to deduct copyrights separately since they are an asset which can be valued separately.

You should check with your accountant on this. Many years ago I donated rights to software which I donated to a non-profit.

Often when assets are transfered to non-profits, a letter from the non-profit identifying the asset and its worth works.



Mar 06, 2014 at 01:30 PM
colinm
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p.1 #6 · p.1 #6 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Bernie wrote:
You might be able to deduct copyrights separately since they are an asset which can be valued separately.


You cannot. An accountant who tells you otherwise is scheduling an audit for you, so make sure audit support is included in his fee.

This has been a pet project at tax season for ASMP, APA, and others for many years now. The IRS is quite clear in guidance and action about what's deductible, but photographers and similar creators are such an edge case that many generalist accountants and tax preparers are oblivious to what's allowed and what's not.

Allowable: Actual out of pocket expenses.
Not allowable: Everything else.



Mar 06, 2014 at 03:33 PM
Bernie
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p.1 #7 · p.1 #7 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Yes, the IRS looks at these more closely because of the tendency to overvalue, but IP can be donated. Determining Fair Market Value is key.

http://www.irs.gov/publications/p561/ar02.html

From:
http://www.irs.gov/pub/irs-pdf/p526.pdf

Patents and Other Intellectual Property
If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Intellectual property means any of the following:
Patents.
Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)).

Again, check with your accountant.



Mar 07, 2014 at 04:50 AM
Daniel Smith
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p.1 #8 · p.1 #8 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Why not have the charity pay you and then you donate that amount to them? No question as to how much you donated as you will have receipts.


Mar 29, 2014 at 04:04 AM
cwebster
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p.1 #9 · p.1 #9 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Don't get audited after doing that. It's so transparent...

<Chas>



Mar 29, 2014 at 04:59 AM
Dave_EP
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p.1 #10 · p.1 #10 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


eric chang wrote:
How would you draw up an invoice? Draw it up normally for an event, then zero it out at the end?


If you're not expecting to get paid then who is the invoice for? You? The Charity who will not pay anything or the IRS?

Any of those result in a zero value anyway!

You can only claim the genuinne out of pocket costs and you should really get receipts to cover them too. Where the receipts are for more than your costs then you can apportion them (e.g. fuel receipts). Whenever we film for charity (for free) we don't even invoice them, we just put our expenses through the company accounts as normal and note they were for the charity shoot, just like we'd note what other expenses were for.

If you're doing something for charity, do it because you want to help the charity and not for the tax deduction.



Mar 29, 2014 at 07:53 AM
 

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GoGo
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p.1 #11 · p.1 #11 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Daniel Smith wrote:
Why not have the charity pay you and then you donate that amount to them? No question as to how much you donated as you will have receipts.


Agreed, this is the way I do it.

Treat the job like any other, when done add up expenses, charge for all expenses, then add your usual charges plus usage. Submit the bill, get paid, put the check in the business account and then issue a check from the business account as a donation.

Done.



Mar 29, 2014 at 01:19 PM
Dave_EP
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p.1 #12 · p.1 #12 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


GoGo wrote:
Agreed, this is the way I do it.

Treat the job like any other, when done add up expenses, charge for all expenses, then add your usual charges plus usage. Submit the bill, get paid, put the check in the business account and then issue a check from the business account as a donation.

Done.



Forgive me, but what do you actually gain by doing it this way? If you have $100 of expenses and write that off against tax then that's a $100 write off.


If you invoice for $10,000 with $100 in expenses that's $9,900 income you gained. Writing a $10,000 check still leaves you with only $100 to offset against taxes since $9,900 will be offset by income.

Is this somehow different where you live?



Mar 29, 2014 at 04:33 PM
GoGo
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p.1 #13 · p.1 #13 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?



Forgive me, but what do you actually gain by doing it this way? If you have $100 of expenses and write that off against tax then that's a $100 write off.


If you invoice for $10,000 with $100 in expenses that's $9,900 income you gained. Writing a $10,000 check still leaves you with only $100 to offset against taxes since $9,900 will be offset by income.

Is this somehow different where you live?


I gain the approval of my accountant.
Business is a team sport. I am the photographer, my accountant is the bean counter, my lawyer looks out for my interests and my business is better off for it.



Mar 30, 2014 at 02:28 PM
Dave_EP
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p.1 #14 · p.1 #14 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


GoGo wrote:
I gain the approval of my accountant.
Business is a team sport. I am the photographer, my accountant is the bean counter, my lawyer looks out for my interests and my business is better off for it.


Approval for what exactly? Doing charity work (which they could see from your expenses) or for increasing your apparent (fake) turnover while reducing your % profit ratio?

I'm not criticising, I'm genuinely interested.



Mar 30, 2014 at 07:23 PM
cwebster
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p.1 #15 · p.1 #15 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


And if your accountant lets you get away with what you're proposing, you both should be penalized. It's flat illegal and so transparent that it'll show up on any audit.

The only thing you can deduct from your income tax is the hard cost of materials of your donation. Your time, talent, etc. isn't deductible.

Maybe this is why you have/need a lawyer on your team.

<Chas>



Mar 30, 2014 at 07:47 PM
GoGo
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p.1 #16 · p.1 #16 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Gentlemen,

I just do the photography work, the rest I leave to the professionals.

My point is that I am not a CPA, I let professionals manage my business.

Honestly I don't have time to deal with legal issues or accounting issues, I have a team for that.

My point is that anyone in business should do the same, work with professionals.

Would you try to fix a cavity, a fractured bone, or your home plumbing for that matter?




Mar 31, 2014 at 01:32 PM
Dave_EP
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p.1 #17 · p.1 #17 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


GoGo wrote:
I just do the photography work, the rest I leave to the professionals.


That's OK, but check their contracts to make sure you're not ultimately responsible if they make a mistake and you don't catch it. Generally contracts say you have the final responsibility to approve accounts etc and they can't be sued if there is something wrong and you don't pick up on it.

I've found several mistakes by so-called professionals over the years, some of which would have cost me extra in taxes, not saved tax. No one is infallible and it behoves you as a business owner to understand how this stuff really works.

Just doing the photography is something an employee does. A business owner needs to know and do very much more.

However, if you're happy with the current situation then stick with it



Apr 01, 2014 at 11:18 AM
fhotoace
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p.1 #18 · p.1 #18 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Here is what I do.

I charge the charity the same fee is do when shooting for commercial clients.

I produce two invoices. One for my fee and one for my expenses.

When they pay me the fee, I write them a check for that amount and then I can deduct it as a donation. They pay the expenses which are not taxable and the income I get from the actual fee is.

This process keeps the paper trail simple and easy to understand not just for the IRS, but for the charity as well.



Apr 02, 2014 at 10:49 PM
Littleguy
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p.1 #19 · p.1 #19 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


I don't see how getting the charity to pay an invoice and you giving it back as a donation does anything in terms of your tax situation. The net effect is the same - just more wasted time and paper to move some money around.

If you receive money from a job - that is taxable income.
If you incurred out of pocket expenses for your business - that is a tax deduction.
Getting money from a charity or incurring expenses for a charity job doesn't change that.

So if you charged $1000 for a job to a Charity - that is 1000 of taxable income you have to add to your income.
If you donated that money back to a Charity - you get a donation receipt of $1000 to offset your income.
So why add $1000 to your income and deduct it out as a donation at tax time - just more paper work for 0 benefit.

Any expenses incurred would be treated like any other business expense you have - tax deductible regardless of what job it was for - even if you didn't invoice it. So save yourself some time and don't invoice it only to donate it back. Just record your expenses and deduct it like any other expense in your business.



Apr 09, 2014 at 06:56 PM
glort
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p.1 #20 · p.1 #20 · Donating time/copyrights to Non-Profit Charity - how to draw up invoice?


Dave_EP wrote:
If you're doing something for charity, do it because you want to help the charity and not for the tax deduction.



EXACTLY!!

Worrying about the tax writeoff seems very petty and miserable to me. Totally against the spirit of why I do this sort of work myself.

I have done a fair amount of work for a particular charity and I do it for the feel good/ Put some runs on the good Karma board and that's it. A warm handshake and a Cuppa tea is the reward I'm looking for along with the self indulgent ego trip. I'm not a wonderful person but at least I can satisfy myself that I did do something good for someone prurely out of the little goodness in my cold heart.

I know the work I did for these people initially enabled them to hugely leverage the profitability of a business they run. It went from being something of a back corner experiment one guy had an idea for to far and away the biggest revenue generator they have. I go back and the guy tells me how much they blew their budgets and predictions out by and what they have been able to do with the money they raised to help the people they look after. All I do is provide them with the proper presentation of their products that allows them to keep developing their business and public awareness of what they do.

As the guy I deal with always points out, my contribution is not a day of my time and some pictures, it's the ability for them to raise hundreds of thousands of dollars a year for their cause. I also shoot a lot of in house stuff for their magazine, website, fundraising efforts and stories of the people they help.
Dunno how many of my pics have been on their mag covers, annual reports etc but as long as I have been in this game and despite the companies I have worked for and been paid by and the publications and places my pics have been featured over the years, when that mag arrives with my pic on the cover and filled with my pics inside, I get a buzz like it's the first pic I ever had published all over again.

To me, that head swell makes worrying about any sort of tax write off I could use a horribly petty and scrooge like thing. The more I think about it, the more it would just kill the whole thing for me.

Honestly, and without trying to offend anyone, If a $100 write off on expenses for such a job actually meant anything to me, I'd be more worried about what the hell I was doing wrong in my business to be worried by such a pidling amount! I dosen't all add up for me becuase I don't do enough of it to add up to anything worthwhile so therefore I don't/ won't worry about it at all.
And remember, it's only a DEDUCTION not a refund, so you'll be lucky if it actually makes a $20 out of pocket difference to you. If $20 or 500 makes a difference to a person in their yearly earnings then I'd be looking very hard at how I was running my business and the big picture not about some petty tax writeoff on one charity job.

Frankly, I have better things to worry about than arsing around claiming a $100 benifit for something that should be done for reasons of good will rather than mercinary.

If I couldn't do it as a total donation I sure as hell wouldn't be doing it at all.




Apr 11, 2014 at 03:49 AM
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