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OT: Need advice on budget for tax write off

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Sebastian Alvarez
OT: Need advice on budget for tax write off
on Dec 6, 2008 at 6:19:15 pm

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.



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David Roth Weiss
Re: OT: Need advice on budget for tax write off
on Dec 6, 2008 at 6:46:20 pm

Sebastian,

Simple answer, establish a day rate and multiply that by the number days it took you to complete the project. Break it down in a manageble list for the client similarly to what you have above.

More importantly, don't wait until after the fact to start getting paid. One third or one half up front is the way to think, and that figure can be based upon your estimate rather than a fixed flat price if you put that into your invoice or production agreement.

David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.


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cowcowcowcowcow
Nick Griffin
Re: OT: Need advice on budget for tax write off
on Dec 6, 2008 at 9:33:17 pm

Sorry to be a wet blanket, and... I'm not an accountant, nor a tax attorney, BUT... I don't think you can write off your own labor when donated. You can write off things like mileage, tape costs, etc. -- things that cost you money. Please check with a professional tax preparer. This was the advice given by my accountant.


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 6, 2008 at 10:08:04 pm

I'm pretty sure you can donate services. The donation form my organization gave me, which is used routinely, has two options, Products or Services, and I know from the people there that handles that sort of thing that many people donate services which later they write off, for which this form is necessary.


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Nick Griffin
Re: OT: Need advice on budget for tax write off
on Dec 6, 2008 at 10:26:00 pm

Possibly the difference is one of locale. I'm told that in the US I cannot deduct from my taxes for any professional time I choose to donate. If you are in the US Sebastian perhaps the "donation form" has no tax significance and is for just that, a donation. Then again, if you're NOT in the US, the laws may be very different.

Just to be sure, I'll ask my accountants again.


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 6, 2008 at 10:28:53 pm

I'm in the US, and while I don't have the form with me now at home, I remember it's a standard form, not something improvised by my office. I'll check better on Monday though.


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Nick Griffin
Re: OT: Need advice on budget for tax write off
on Dec 6, 2008 at 10:33:27 pm

Or... if you are an employee of the entity to whom you are donating you may very well be able to take employment hours and donate them. As a self-employed individual I am not (I'm told) able to take any form of tax deduction for my time.

It will be interesting to see what we both find out.


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David Roth Weiss
Re: OT: Need advice on budget for tax write off
on Dec 7, 2008 at 12:58:26 am

I apologize for misreading the initial post Sebastian -- it was long and I was hurried.

However, I do agree with Nick's initial take. I'm pretty sure you can only write-off tangible donations such as goods and cash.

David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.


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Timothy J. Allen
Re: OT: Need advice on budget for tax write off
on Dec 7, 2008 at 2:07:45 am

But do you guys usually send some sort of information to the organization that you donated goods and services to that spells out the value of what you donated - of course noting that it was donated so they don't owe you anything?

Not necessarily an invoice, since you don't want anyone to get mixed up, but perhaps a letter or something that still sums up the value of the donation (if it had been purchased) for everyone's records?

You certainly don't want to be tacky, but it seems that a "paper trail" might still be useful for a number of reasons - even if no fee is charged, exchanged or owed.

Thoughts?




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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 7, 2008 at 2:34:47 am

Actually I was going to include that in my post and I forgot, so thank you. I do not have a video business yet, I hope to start one, but I have an invoice template that I downloaded from the net and I added my logo to. I used that template to invoice them for some VHS to DVD transfers I did for them, and I was planning on using it for this as well with a discount for the total value I assign to it. Would that be the way to go?


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Terence Curren
Re: OT: Need advice on budget for tax write off
on Dec 7, 2008 at 2:39:59 am

You can't write off your donation of time in the United States. Sorry, but that is the reality. Otherwise every volunteering parent, holiday meal delivering, Kiwanis member, etc. could have a huge deduction every year.

Sorry man. The good news for a business that volunteers their employees time is that the employees pay is still a deductible expense. But the employee gets no credit even if he volunteers to work for free.

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


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Bill Dewald
Re: OT: Need advice on budget for tax write off
on Dec 7, 2008 at 4:31:48 am

.[Terence Curren] "You can't write off your donation of time in the United States."

And I'll third this. You can't.

There's no way to put a legitimate monatary value on that time. Otherwise, people could say things like, "I volunteer to sweep your floors for $10,000 per hour." And then wipe out their tax obligation in, say, two hours!

If you're trying to go into business, find an accountant. They'll help you deal with the income from those invoices, and answer your questions like this one.


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 7, 2008 at 4:38:06 pm

Well, I'll have to check this with my organization when I go back tomorrow, but while you have a point in the sweep the floors for $10,000 an hour thing, I don't think this is the same. Yes, it is a service, but there's also physical products that I donated, the DVDs with the videos that I made for them. And I can assign any price I want to those DVDs in the same way that when you buy an educational DVD of any kind they are charging obviously not just the few cents that the DVD media costs, but 99.99% of the price is the work that actually went into producing that DVD, from the conception of the idea, going through the production, video taping, editing and final delivery on DVD, whether it's mass produced or not.

Of course I could find an accountant like you suggest, but I don't have the money for that since all I could afford went into equipment.

Still, while I appreciate all the responses regarding the tax thing, what I really would like to know, which was the point of me posting the description of my work, is how much would a small video production company charge for a job like this, which not only I need in case I'm able to write this off in my taxes, but also in the case I do it again for any company or organization and I charge for it.


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Steve Kownacki
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 1:16:08 am

Yep, tangible goods only. You do this stuff out of the kindness of your heart. The trick is to make them fully aware of the value and then your compensation is advertising, free press, adding logos to packaging (I think you mentioned that one) maybe get a tasteful ad at the end credits, that sort of thing. They can also be a source for potential clients like on marketing/PR committees.

Steve



Jump to the FFP Website



View Steve Kownacki's profile on LinkedIn




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Terence Curren
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 1:26:02 am

[Sebastian Alvarez] "what I really would like to know, which was the point of me posting the description of my work, is how much would a small video production company charge for a job like this, which not only I need in case I'm able to write this off in my taxes, but also in the case I do it again for any company or organization and I charge for it."


Rates for services vary all over the country and job by job. They also come under the heading of proprietary information for most businesses. I for one and not going to tell my competition what I get on specific jobs, but anyone can read my "rate card."


As for the tax thing, you are not getting it. If you spent money on goods and gave them away, you've already expensed them through your business and the fact that you make no income on them makes them a wash on your tax return. But you can't write-off what you "could have" sold them for.

I'm not a tax attorney or a lawyer, but it is very clear in the IRS rules that what you are trying to do isn't acceptable. Granted you can put anything you want on your tax return. And you can even plead ignorance later on if you get audited. But the best you could hope for would be to have to pay the difference plus interest. Worst case, if they proved intentional fraud (which wouldn't be hard with all the public trail here), you could end up in federal prison.

Is it worth that risk to ignore what we are telling you? If so, knock yourself out.


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


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cow
Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 2:13:52 am

[Terence Curren] "As for the tax thing, you are not getting it. If you spent money on goods and gave them away, you've already expensed them through your business and the fact that you make no income on them makes them a wash on your tax return. But you can't write-off what you "could have" sold them for.

I'm not a tax attorney or a lawyer, but it is very clear in the IRS rules that what you are trying to do isn't acceptable. Granted you can put anything you want on your tax return. And you can even plead ignorance later on if you get audited. But the best you could hope for would be to have to pay the difference plus interest. Worst case, if they proved intentional fraud (which wouldn't be hard with all the public trail here), you could end up in federal prison.

Is it worth that risk to ignore what we are telling you? If so, knock yourself out."


This seems pretty harsh to me. "Fraud", "...wouldn't be hard with all the public trail here", "you could end up in federal prison".

Seriously dude, are you having a bad day or something? I just made a post to not even ask about the tax deduction, but rather asking other people who like me edit in Vegas Pro software, what amount would they apply to the kind of work that I did, which then Creative Cow transferred to this forum instead. Then some people here posted their opinions on the tax thing instead, fine, but your post makes you look like a jackass. My only reason for posting was to have an idea of what my services would be valued at. As for the tax issue, I'll simply go with my information to the IRS and check with them if what I did is tax deductible or not, imagine I'm not going to be all scared of going to jail suddenly because of a moronic post like yours.


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Ron Lindeboom
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 3:19:42 am

[Sebastian Alvarez] "I just made a post to not even ask about the tax deduction, but rather asking other people who like me edit in Vegas Pro software, what amount would they apply to the kind of work that I did, which then Creative Cow transferred to this forum instead."

Sebastian,

Your post was moved as you yourself put an "OT" at the front because it was "off topic" for the Vegas forum. These kinds of questions almost always go unanswered on other forums, but they get addressed here.

If you do not like the advice, you don't have to follow it. If you don't like the way it was presented, you are entitled to be offended by it. But the fact is, if you live in the United States, you cannot write off your hours.

These people are NOT trying to beat you up and humiliate you, Sebastian. What they ARE trying to do is make you a better business person and one that is aware of things that you are clearly not aware of.

Take it all with a grain of salt, man. If you listen, you will find out what many have found out -- that this forum is the "money" forum and those that make it a regular stop in their COW wanderings make more money and have more options than many of those that don't.

Best regards,

Ron Lindeboom
creativecow.net


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 4:08:06 am

Well, here's the thing, Ron. I understand and I don't have a problem with the post being moved here. I also don't have a problem with the other posters who just offered their point of view on the tax matter, except for this last guy who started saying things like "Fraud", "...wouldn't be hard with all the public trail here", "you could end up in federal prison". Now that's very unhelpful, rather out of line and offensive.

[Ron Lindeboom] "These people are NOT trying to beat you up and humiliate you, Sebastian. What they ARE trying to do is make you a better business person and one that is aware of things that you are clearly not aware of.

Take it all with a grain of salt, man. If you listen, you will find out what many have found out -- that this forum is the "money" forum and those that make it a regular stop in their COW wanderings make more money and have more options than many of those that don't."


Well, so far I haven't found anything in this thread that would help me start a one man business, since nobody has given me a clue on how much would they charge for the kind of service that I specified. Terence said that he wasn't going to tell the competition what he gets on specific jobs, but I'm just trying to get an idea on what people charge for these type of things, otherwise I can start by assigning an hourly rate or a quote based on the amount of work that can be either ridiculously low or ridiculously high because I have no clue what people charge for these things, other than a loose notion that weddings are charged $1000 on average, which I got only from a couple of people who paid that themselves. I would think that the idea of a forum on Creative Cow like Business & Marketing would be among other things to shine a little light for those who are beginning and are good with the geeky video stuff but don't have any notion of business and marketing. Am I wrong?


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Terence Curren
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 4:12:49 am

Sebastian,

You came here looking for advice on how much to "make up" a bill so you could write is off on your taxes.

You were answered that you can't do that. Then you said you think you can so would someone give you a price. Am I misstating what I have read from you so far?

If you think I'm being a prick, wait until the IRS knocks at your door.



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


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 4:58:18 am

[Terence Curren] "You came here looking for advice on how much to "make up" a bill so you could write is off on your taxes.

You were answered that you can't do that. Then you said you think you can so would someone give you a price. Am I misstating what I have read from you so far?"


That's what I would call really twisting my intentions for posting. I donated a service, I was told by the non-profit organization that I work for that I could include that in my taxes as a write off, for which I was even given a form, and since I have no idea how much would I charge for something like what I donated, I came in here asking for that, precisely because I don't want to either put it a value that is too low, or worse, one that is too high, because that would indeed be fraud.

Somehow you twisted that into making it look that I was trying to commit fraud to the IRS and that this thread could be used as further proof to land me in jail. Do you by any chance work for Fox News? That really seems like the kind of comment Sean Hannity would come up with, taking a grain of dirt and turning it into a mud avalanche.

[Terence Curren] "If you think I'm being a prick, wait until the IRS knocks at your door."

Now, that seems like quite a prickish comment to me. Pardon me if I just made up a word, but you get my point.
Besides, I was planning on going to the IRS myself to make sure that I include that in my taxes the right way to avoid any further problems. They will either tell me that I can't, or that I can, and what's the proper way to do it.


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Terence Curren
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 5:48:14 am

[Sebastian Alvarez] "That's what I would call really twisting my intentions for posting."

Really?

[Sebastian Alvarez] "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,"

Seems like you are asking to write it off to me. Just to prove what a prick I really am, go to this link:

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

"Not Deductible As Charitable Contributions...

(SNIP)

...Value of your time or services"


Now you can continue to argue with me all day, I don't really care. But when it comes your turn to argue with the IRS, remember this prick warned you for your own good.

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


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 5:55:19 am

Whatever, dude. Even if what you say is the way it is, you're a prick for being offensive towards someone who simply asked how much to value his services because he doesn't have the experience to do so. I don't even care to waste time responding to your rude comments anymore, and I'm glad I do not work with you or know you personally.


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Terence Curren
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 6:05:21 am

You're welcome. :-)

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


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David Roth Weiss
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 4:19:05 am

As I stated earlier Sebastian, establish a day rate and charge by the day. Rates vary all over the country and by experience and equipment, so no one can give you exact amounts. However, a day rate between $350 to $550 seems about right for a person who has has not yet established themselves.

David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 5:01:37 am

[David Roth Weiss] "Rates vary all over the country and by experience and equipment, so no one can give you exact amounts. However, a day rate between $350 to $550 seems about right for a person who has has not yet established themselves."

Well, that's a start. At least it's a helpful post. When you say day rate, how many hours would you include in that rate? I'm trying to determine what would be a proper hourly rate for a beginner.


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Mike Smith
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 9:56:27 am

Being rude to people who are trying to help you is a strange approach, even when you don't like what you read.

But for me a day is 8 hours. For some it is 10 hours. I'd guess David's suggestion used a number somewhere in that range. Choose your own preference, but no doubt you are aware that if you give an open-ended "day rate" there are those around who will take that as licence to use you for 12, 16, 18 hours.

A proper (day or hourly) rate is what someone will agree to pay (you).

A corporation will often agree to a higher rate that a non-profit - and expect speedier performance, better service and higher finished standards.

As a beginner, an hourly rate is tricky concept: as you are learning on the job, what proportion of your hours spent are truly and fairly chargeable? Would you pay a carpenter to learn how to perform his (her) trade, on your time? You'll want to balance out an appropriate "pro" rate with the extra time you are spending - or your client will want to.

The hours approach can be misleading in another way, too - is the value (or price) of an object defined by the nature of final object, or the many (or few) hours taken to create it ..?

Or more directly, if one person takes 2 days to edit 2 hours of material into a polished 5 minutes, and another person takes 30 days to do the same thing, can the person who takes longer expect to charge more and keep customers coming back?







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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 3:00:13 pm

Finally we're getting to something productive, so thank you Mike, and also David. Mike, I'm not rude to people trying to help me, in any case Terence was rude and twisting my post, so I had to address that. I don't have a problem with any of the other posters in this thread, and I appreciate your advice.

You bring some interesting points.
[Mike Smith] "As a beginner, an hourly rate is tricky concept: as you are learning on the job, what proportion of your hours spent are truly and fairly chargeable? Would you pay a carpenter to learn how to perform his (her) trade, on your time? You'll want to balance out an appropriate "pro" rate with the extra time you are spending - or your client will want to.

Or more directly, if one person takes 2 days to edit 2 hours of material into a polished 5 minutes, and another person takes 30 days to do the same thing, can the person who takes longer expect to charge more and keep customers coming back?"


I suppose that, as in any other business, you start by charging less than others in part because you're not among the best or fastest in your trade. Of course if it takes a person 30 days to do what a highly experienced person does in 2 days I think probably that person is not in the right profession. But yes, let's say what took me about 50 hours, an experienced videographer could've done in 40, but the experienced one would've charged so much more either per hour or for the full project that in the end the customer would've paid a lot less for my work, if it would have been a paid job and not a donation.

One question that arises from this is, what happens when instead of charging the customer an hourly rate you mutually agree to set up a price up front, then you request either one third or half of the payment up front, but then the customer changes or adds new content to the project, or changes their mind about what has to be included and what not? How does that work exactly if you already set up a price for the whole project? Does it have to show somewhere in the contract that if the customer introduces changes that will cause an increase in either videotaping or editing time, then he will have to pay more? I would think this is pretty obvious, but I would like to know how it works in the real world.

Thanks


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Terence Curren
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 3:04:56 pm

[Sebastian Alvarez] "One question that arises from this is, what happens when instead of charging the customer an hourly rate you mutually agree to set up a price up front, then you request either one third or half of the payment up front, but then the customer changes or adds new content to the project, or changes their mind about what has to be included and what not? "

It is a good idea to put in the original contract a set number of revisions. Depending upon how many layers of approval there are in the company you are dealing with, this could be one revision or five. The more detailed your contract about exactly what you are agreeing to deliver, the better. Even down to quantities of elements and additional costs for more.



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


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Mark Suszko
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 4:03:08 pm

At the risk of scratching open a healing wound, I can think of one area where he might be able to 'write off' the hours, though not necesarily in IRS terms; If it was donated to a political campaign or organization under the heading, "In-Kind Contribution".

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 if it is worth more than a certain base amount. The contribution can be in cash or check, or stocks, etc. or it can be physical things and services, like rental of an office and office furniture, computers, software donations, printing jobs for banners and flyers and mailers, building a parade float, and yes, making videos.

This came up in the last campaign when it was discovered John Edwards was basically hiding a "fee for services" by paying his mistress a salary to make campaign videos for the internet, at what appeared to critics to be highly inflated rates compared to the final product. Not trying to make any political point, just showing that donating your time and skill to make a video for a political organization can be given a cash equivalent value. Ask an accoutant if that kind of "contribution" is deductable. For you, I'm guessing not, for the organization, maybe?


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Sebastian Alvarez
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 4:37:34 pm

[Mark Suszko] "At the risk of scratching open a healing wound, I can think of one area where he might be able to 'write off' the hours, though not necesarily in IRS terms; If it was donated to a political campaign or organization under the heading, "In-Kind Contribution"."

That's the term my organization used for it, and I think that's what it says on the form they gave me. Today I'm home sick, but hopefully tomorrow I will go back and get the form and see.


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cowcowcowcowcow
Steve Boultbee
Re: OT: Need advice on budget for tax write off
on Dec 9, 2008 at 1:12:56 am

"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 ยง1.170A-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.



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terence curren
Re: OT: Need advice on budget for tax write off
on Dec 9, 2008 at 12:06:34 am

[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


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Mike Smith
Re: OT: Need advice on budget for tax write off
on Dec 8, 2008 at 7:15:24 pm

Fixed fee or time rate?

Customers, suppliers and projects split on the fixed fee or time rate issue. I regard it as a negotiation issue, project by project, where the "best" outcome is one where everyone is happy enough with the price, the schedule, the quality, and the final project (and the payment schedule).

For suppliers, time rate can look attractive: whatever you do, you can bill for. Camera crews, sound recordists, edit facility houses often go exclusively this way, and some script writers and graphic designers too.

For professional buyers, this is not scary. If you freelance with professional production companies, this is often a good route - everybody knows more or less what's what, and nobody ends up feeling cheated. Of course, the person paying the bill is going to want to be fairly sure that they are getting good value and output for time.

Less regular buyers, though, and those seeking to hire a producer rather than a technician, an all-in fee looks much more attractive - the buyer can ask for a good description of the project, agree quality and schedule, and have a pretty good idea of what they'll get and what it will cost.

For producers, too, this can be good: negotiate a decent rate, and retain the flexibility to use resources wherever seems best for the specific needs of the project. There will always be unanticipated expenses on almost any project, so budget as accurately as you can on an agreed specification, and allow a "contingency" for yourself - an amount of over-run you expect. Then you can plan as you see fit, and absorb small departures without stressing your client by going back for more money.

A stressed client is bad - less likely to return, less likely to pay promptly, less likely to recommend you.

But you do need to be really clear up front about what's being offered, and then manage the project and deliver just that. As producer, pretty well all decisions on the production will fall to you - take charge and act like a producer. A busy client will be pleased. I invite the customer to review and sign off on script or project outline, on first edit (offline, from the old days) - they only get one - and final edit, or online - again, they only get one. Changes requested at offline can appear in the online: changes after the online will normally incur extra costs (unless it was a goof from my side).

Changes in project definition once the project's started - it's going to happen. If it's possible to reorganise on the new spec without extra costs, then that's the way to go (in my opinion). But if changes are going to stress the budget, point that out right away, and if necessary back that up with a speedy written quote for the extra costs . It's perhaps not surprising that potential changes swiftly sort into "essentials" - quite rare, and usually readily paid for, even if by trimming other parts of a project to keep costs down - and "whims and luxuries", not wanted if they are to cost more.

Either approach works - and with a bad customer (or bad supplier) either can go sour. If (you or) your client's main motivation is to take advantage of the other party and get something for nothing or as little as possible, this is a client (or supplier) to avoid.

You need to be trying to "read" your negotiating partner up front - and work out a deal that gives you both what you want - good work at a price you can both live with. There a plenty of people out there it is better to turn away. The ones that want great value and quality but will cut you a fair deal (and pay on time) deserve your very best attention: you want them as regulars.











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