Taxes - Charity quilts

[DebLou]

How do you do your taxes in regard to charity quilts. My tax person says that since you don't actually have something in inventory that you're donating so that you can lower your inventory then it really doesn't do anything. The only thing you could claim would be your thread.

I thought services and wear and tear on the machine would count for something but I guess not.

What do the rest of you do?

[JustSewSimple]

Well, I buy my fabric and batting so I keep the receipts and count that. Ohoooo, you are talking about TIME! Why don't you count that time as advertising. Figure how much you make per hour. Would that work?

[ThreadWaggle]

The only things that I can claim are batting and thread, per my CPA.

From what I understand if someone pays to have me quilt they can deduct the whole invoice.

[DebLou]

Thanks for the quick responses. This is my first time doing this and have no clues as to what I'm doing. The only thing I could claim then would be my thread and I don't think thats worth messing with.

Thanks again,

[wnott]

It is my understanding that you can only claim 'stuff', not your time. If you are just quilting for a charity then you can claim the cost of a cone of thread. I am doing QOV's so I claim the thread, the batting and the shipping receipt. I don't expect the IRS has a clue how much thread goes into 1 quilt or that they even question it. If you do only 1 charity quilt a year, may not be worth it but if you do a few a month, it could add up.

[Gretchen]

Ask your accountant about claiming it as advertising.

[quiltmonkey]

Hi. I recall a recent post by our friend here, Julia Graves. This is some good information to keep in mind on tax deductions.

Originally posted by juliagraves

Please note that the cost of your time is NOT a charitable deduction in the eyes of the IRS - only cost of materials, transportation costs, etc. Here are the quotes from Publication 526:

Value of Time or Services

You cannot deduct the value of your time or services.

Out-of-Pocket Expenses in Giving Services

Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:

* Unreimbursed,

* Directly connected with the services,

* Expenses you had only because of the services you gave, and

* Not personal, living, or family expenses.

Julia

[jkerekes]

For some charity work you could:

Charge the charity for your work and have them cut you a check. Then turn around and donate that amount to the charity and get a receipt.

Obviously this doesn't work for QOVs, but it does work for churches and other organizations with the appropriate tax status.

Jill Kerekes

[DebLou]

Thanks for the clarification. I'll print the quote from Shana and keep it in my tax files.

Thanks again,

[juliagraves]

In response to: Charge the charity for your work and have them cut you a check. Then turn around and donate that amount to the charity and get a receipt.

This actually doesn't really help you. Let's say you charge the charity $100, and you had $10 of thread and batting in it.

Under the Get Paid/donation scenario:

Income: $100

Expenses:$110 ($100 donation + $10 thread & batting)

Net: $10 in expenses

Under the donate thread/batting scenario:

Income: $0

Expenses:$10 ($10 thread & batting)

Net: $10 in expenses

Do count any miles to pick up or drop off the quilt, purchase supplies, etc.

Julia