I only perform 3 0r 4 free shows a year but I do because I want to perform & help these organisations.

As Nicholas says it gives you a good feeling inside!!

Sorry, but when you take a fee & then donate the same amount to the charity, it is a wash & of no benifit to you tax wise.

All you are doing is making the fee you receive wash out with the donation. There is no benefit above just giving the free show.

However, you can deduct your expenses, mileage etc. as a tax deduction.

Please check with a tax professional to verify. By accepting a check & donating it back the only thing accomplished is adding to your paperwork.

Allan,

I think you missed the point.

I agree with you that it does add slightly to your paperwork, but the benefit is definitely there. It gives you a paper trail as proof for the tax man that the show (or cost of the show) was actually donated and that you are not trying to deceive the government.

After all, they wouldn't deceive us... (said with tounge firmly planted in cheek.)


Lyndel

Lyndal - That is a good idea. In Oz, you have to collect a sales tax which goes to the government so either you or the charity would spend money,

Allan you COULD NOT POSSIBLY BE MORE WRONG!!!!

ALL charitable donations are deductibly period! If you donate clothes to the church they give you a recipt for the donation. This is the catagory that it falls into.

Perhaps YOU should consult a tax consultant before you make comments you have not the slightest idea about which you are talking about.

Taxes are all about a paper trail. Just dong free shows gives no benifit. Doing the show and donating the fee gives you a charitable tax deduction plain and simple. You do what you want with your money, but don't give people bad information. Taxes are such a huge concern when you work as a pro that some simple things like this can help. It is not HUGE money needless to say, but it may fill the gas tank one or 2 times a year.

For an example to prove the point, if you took the fee and donated it to ANOTHER charity dollar for dollar it WOULD certianly be deductable as a charitable event. Therefore why the heck would it NOT be a charitable event donated to the same charity? Either you missed the point or are uninformed, either way I hope this clears it up for you.

I don't see how Allan is wrong. His point is that your donation is offset by the income you have to claim from the show. If you took a fee and donated it to another charity, then in Allan's words, "it's a wash."

Danny, you are correct that you can claim the donation as a charitable tax deduction, however, but my accoutant tells me that I can't claim a deduction for my time, just out of pocket expenses, mileage etc., as Allan points out. That's the way I've always looked at it. If that's not correct, I'd like to hear from another tax professional or two.

Jim

In Australia, you can not do what Danny is suggesting. You can only deduct monetary expenses. In other words, you can do donate your fee since you didn't get one! If the charity PAYS you and you turn around and DONATE that fee, you have to claim the income AND the expense. This means you end up getting the same end result as just doing the show for free but with more paperwork!

Not sure what it is like in the states though.

However, I don't think its really charity if your doing it for some kind of return.

Yes, BUT...

Taking your full fee and then donating it back establishes an INCONTESTIBLE dollar value (more than just mileage and supplies).

Okay, Rossmacrae, what am I missing?

If you take your full fee, then you must claim that fee as income. When you donate it back, you get the deduction, but that is offset by the increase in your income. So it's a wash.

Why bother with the paperwork? Somebody enlighten me, please! Tell me I'm missing something so I can get a bigger deduction!!!

Jim

Ok Jim why donate to charity at ALL? TRY to deduct expences on a show you can NOT PROVE YOU EVEN DID!!!!

Doing the show for free does EXACTLY that. Get audited just once and see how fond of just donig free shows the IRS is. Trust me they hate it. The paperwork is what they love to see. They live for it. It is not that much. You guys make it sound like it is reams of paperwork. It is at the most 2 things extra. If you go to an audit with no proof of having done a show and take expences for the show, I promise you a lot more paperwork in your future.

You can claim the deduction for the fee. Whatever your fee is and encompases. Your time is wrapped up in your fee isn't it? You don't quote a fee for your show and a fee for your time. You deduct the whole fee.

If you only deduct expences like mileage, where did you drive? why did you drive and how is that a deductable expence? When you have done the show it shows why and where. 2 very important questions.

Listen you do what you want too.I just wouldn't want to be audited without a lot of paperwork to back up charitable claims. They are a favorite red flag along with home office deductions for the IRS.

Danny,

I didn't say I did not have proof that I did a show. If I donate a show, I usually have a written confirmation specificing the details, as well as copies of any promotional material I managed to get mentioned in and that serves as documentation that I did a show.

Regarding deducting expenses like mileage, I already keep a log of such out of pocket expenses. The IRS does not require receipts for any expense less than $75, only a timely and accurate journal entry. I keep mine on a PDA. My mileage is written in a small log book tucked under my sun visor in my car. These records are all I need in an audit.

If I understand your policy correctly, you charge your normal fee for the show, then donate your fee back to the charity. If so, I can understand your reasons, and they are good ones, I just don't see how that enables you to claim a bigger deduction.

Jim

Bigger who said that? More accurate by far is what I am saying.

Posted: Sep 14, 2005 2:21pm
Wait what I mean is more accurate for ME! not anyone else. I have been audited and the people who did it recomended THIS method. Not anyone else. I figurd they should know what they are talking about.

Thank you for clarifying that. So your decision is based upon your desire to 1) have better documentation in case of an audit, and 2) to establish the value of your services in the eyes of the charity (and others who might be interested in retaining yor services, not because it gives you a larger deduction.

Makes sense to me.
Jim

I'm missing something in your passionate posts Danny.

How does this help the IRS?
Surely, if you just do a show for free WITHOUT claiming any income or tax deduction, it doesn't affect the IRS in anyway? Why would they care if no money exchanges hands?
How does this documentation help?

On another note,
I find it a bit sad that a discussion on doing 'free' and 'charity' shows leads back to 'what can I get out of it'

Jim thank you for crystalising the position. You hit 2 nails right on the head. Could not be simpler and I appologise for my unclear posts. I guess I think things that I don't write sometimes and am unclear. Sorry for the trouble, but you have made the point in 2 sentences and I thank you!!!

Nicholas first of all you asked the question how people choose what shows they do for charity. Unfortunatly we are in business. You posted this in "TRICKY BUSINESS" after all so why would you think it sad to look at it from a business point of view?

Second of all doing charity work actually is a business for some like it or not.

If you deduct expences, and no proof of a show, it will lead to problems. If you are not a professional magician, that is to say it is your only source of income, then maybe these things don't matter to you. Unfortunatly to professionals these are very real concerns and must be dealt with properly or things will be uncomfortable. This is a reality not so much brought on by us, but the regulations that we must follow. Deal with it. The IRS cares once you deduct something.

Do you think ANY business does charity work WITHOUT looking at the tax liabilities? If they do they are fools plain and simple.

Sure in Utopia it would be great to have giving hearts and no need for accountability. I unfortunatly for me do not live there. I live where the tax codes are quite strict and seriously enforced. I must live within them and do business accordingly.

This is a picture of the National Red Cross building in Washington DC.

http://www.sbaranes.com/g/redcross-1.jpg

Do you think they built it without taking advantage of tax laws?

Being concious of tax deductions is just good business. ...And as Danny stated above, we are a business and need to really start thinking of ourselves as one.


Lyndel


Lyndel

Many times we performers are asked to donate our services for a charitable event and we are often willing to do so for charitable reasons, but we also must remember that we sell dates on a calendar and once we commit to doing a free show on a certain date, then it cannot be sold to a paying client and there is the potential for lost income. Therefore it makes sense to have a clear policy for dealing with such requests since they are simply part of the business.

There are many factors that affect one's decision to accept such a booking, besides suporting a favorite charity. Is everybody else donating their services or are they paying some of the other venders like tent rentals, catering, the band, the headline act etc? I would not donate not services if others are getting paid and the organizers are now out of money, but want some strolling entertainment for the event.

You can do a free show for charity and still receive benefits other than the good feeling it leaves you with. In addition to the tax deduction, you can get great publicity, meet interesting people and visit exotic places. Last night on Jay Leno, there was a comedienne (sorry I missed her name) who spoke of doing a benefit show in Hawaii for the armed forces. Her eyes lit up when she said, "Of course I'd did the show, I got a free trip to Hawaii!"

It is simply good business to have a clear policy for doing charitable shows worked out before you get the call to do such a show. I spell out the four things I consider in my course; other's will want to come up with their own reasons and policy for handling the request.

Jim

I want to bring up a misconception that I learned the HARD WAY! You can NOT deduct a free show under United States IRS rules and regulations!! Their reasoning is "it was free how do you deduct a $0 contribution." The only way to get a tax break is to have the charity write you out a check for the fee, then YOU GIVE THEM A PERSONAL (OR BUSINESS) CHECK. That way you declare the income then the deduction. If they audit you the penalties can be "no less than 5% nor more than 50% of taxes owed plus interest on taxes and penalties accruing from date of filing of audited return."

It can be costly to make that mistake because the auditors will believe that "you knew about it but did it anyway therefore the 50% penalty is applied."

Notice the quotation marks. that's how I learned.

Peter

Paddy is exactly right. If you are going to deduct the value of the show you must get paid for it and donate your fee back. Otherwise, just do the show and leave it "off books."

JIm

I once had a BIG name charity offer me a reciept for a cash donation in exchange for my show. In other words, I would do the show for free (no invoice) and they would SAY that I donated my fee in cash EVEN THOUGH I DIDN'T!

They were sure it was legal in Australia. My accountant told me otherwise.

I did the gig for free but refused the receipt.