Should I donate money or time?

Question

I work with a local charity helping them by maintaining their registration and donation databases.  I am technically a 1099 employee, but I only bill them once or twice a year for a token amount, usually around $500 total.  

Recently, they asked if I would be willing to be paid in full for my work (around $4000-5000/yr) and donate that back to the center.  I suspect it is so they can show higher giving amounts.  From a tax stand point, would I be exposing myself to a bigger liability by doing that, or would it all just wash? 

I don't take a deduction for volunteer time because it is more hassle to me than it is worth, but I do 1099 work for business, so that approach is much cleaner for me.

Anonymous · Accepted Answer

The IRS isn't going to like this.

If you are paid $5000 for the work, you will OWE $706 in SE tax.
If you have other income, you will OWE $750 in income tax.

If don't itemize and you donate the $5000 back, you will get zero tax benefit.
If you already itemize and donate the $5000 back, you will save $750 in tax, but STILL owe the $706.

By the way, you can NEVER take a deduction for your time.  Your cost basis in time is zero.

Judy · Answer

If you just donate your time, you pay no taxes of any kind on it.

If you get paid as a 1099 contractor, then donate your entire pay back, the federal income tax will be a wash.  State and local might or might not be, depending on where you live - you might owe it.  And you'd owe the 15.3% self employment tax.

And by the way, you can't take a deduction anyway for the volunteer time, just for associated out of pocket expenses.

And also, there is no such thing as a 1099 employee, you are one or the other.

fiacco · Answer

Yeah approximately £50. Sandra bullock Tiger Woods Madonna Brad Pitt Angelina Jolie Ben Stiller Paris Hilton Lindsay Lohan, P. Diddy, Lenny Kravitz, Shakira, Ashton Kutcher, Demi Moore Adam Lambert Wycleaf Jean Simon Cowell Linoel Richie Usher Rihanna Beyonce

tro · Answer

which ever works for you and the organization, donating your time is your free good will

taking the money and filing your Sch's C and SE and turning around giving back to the organization is again, good will, but you may be able to use that donation as a charitable contribution, if you itemize

it might be they want to keep track of reality expenses for their budget and paying you for the time and effort may be a tool for them to base their budgets on

Trending News

Should I donate money or time?

4 Answers