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Claiming expenses for charity work

Discussion in 'Business Fundamentals' started by diesel nomad, Feb 20, 2014.

  1. diesel nomad

    diesel nomad Junior Member
    Messages: 3


    I'm new to the forum, I joined while trying to find an answer for my question. Forgive me if this has been discussed somewhere (and please point me to the discussion), but I did not come across any threads relating to the topic of expenses incurred while doing charity work.

    I decided not to plow for profit this year (the last two seasons have been a bust here in Northeast Ohio), choosing instead to focus on another aspect of my business. I cancelled the commercial insurance that covered plowing, and had intentions of only doing my driveway and some of my family's driveways in the area.

    At the end of last summer, I was asked if I would plow the parking lot at a community center that our church supports. (The director of the community center felt like he was being "taken advantage of" by the guy they have had for the last few years). The church was going to reimburse me for my expenses; I didn't want to make a profit from it, but I am not in a financial position where I want to actually lose money while doing it. I agreed to plow, and I checked with State Farm just to make sure I would be covered insurance-wise. I learned that the personal policy that I have on the truck would indeed cover me plowing (even a parking lot), as long as I was doing it for charity - with NO compensation whatsoever. I've decided to continue plowing at my own expense, because I believe it is the right thing to do.

    Long story short, I have been wishing that I kept the insurance and took on some paying jobs this year, because I've been fairly busy burning diesel on this parking lot and about a half-dozen residential driveways that I do out of good will. All of these driveways are legitimate charity cases (elderly, widowed, military, etc.) that I would have just worked into a route, if I had one. But the charity cases ARE my route this year!

    How do you guys handle charity work when it comes to bookkeeping? I've been keeping track of mileage and the time that I've been out, as well as what I WOULD be charging for these jobs if they weren't for charity.

    What is claimable at tax-time? (Is there anyplace on Schedule C? Or would it be itemized as charitable giving on Schedule A?) At $4.50 a gallon for fuel, my attitude is feeling less "charitable" every time it snows!!! Although it feels good to help, it would be nice if I could recoup some of these expenses somewhere.

    Thanks for any tips or advice!

    - Matt
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    These are questions for you tax person,as for charity work , To many things going on with this. You would be able to write some of it off and not other parts of it. Maybe your auto insurance will cover you if you hit something,but if someone falls you have no GL .I think you you should cover yourself and bill the church for the cost of the work then donate the money back to them,It would be a wash be you would be covered,I think?
  3. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    You made your bed.....now lay in it. There is a reason this is a business & we get compensated for it....at the end of our expenses we might turn a profit. Your doing it "for charity" undermines the very nature of business.... Of any business. The fact that you chose to only do charity work is no ones fault but your own. We all have our freebies be it family, friends, our church, etc. but we don't do that work to the detriment of making a living. You don't see Home Depot only giving stuff away to Habitat for Humanity....they have to have paying customers to generate that profit to in turn give a portion to the charity of their choosing.
  4. jb1390

    jb1390 Senior Member
    Messages: 710

    When I was in this boat, I claimed legit expenses. Sand and Salt obviously, with receipts. I estimated wear and tear on the truck, and depreciation of the equipment due to the charity work. A note from the financial secretary or similar, estimating the value of the service (and history of bills in years past) should help you in the event of an audit. You cannot deduct the value of the service performed, only what you actually lost in expenses.

    Some people mentioned liability-but I believe in the event of a slip and fall, the church would be 100% liable, since you are not being compensated for the service you performed. Doesn't mean you can't be sued-but the church insurance would cover.
  5. diesel nomad

    diesel nomad Junior Member
    Messages: 3

    Yeah, I did make my bed! One of the things that life has been teaching me in a BIG way in the past 14 months or so is that I need to learn to say "no"!! That is part of what I was hoping to accomplish by not plowing this year.... If I do plow for profit next year, I'll be glad to work the freebies in, but I'm not going to be able to help them again, otherwise. I will finish out this season, and they can find someone else next year.

    Oh, and it turns out the guy that was "taking advantage" plowing the parking lot for the last two years was charging $50. It's a 3/4 acre lot, I told the director that he was actually getting a very good deal!

    Anyway ...

    I wasn't really posting to lament my situation, I was more interested to find out how other guys handle the bookkeeping side of their freebies - or do you not worry about the cost since you're out anyway, making enough on your paying jobs to offset the costs incurred doing any charity plows ("giving back a portion to charity of [your] choosing", as you put it in the context of Home Depot).

    I hadn't thought about the general liability aspect. I have both homeowners and automotive insurance with State Farm; I will have to find out just how far my coverage goes .... Even if I did accept the payment from church, I wouldn't be breaking even, especially if I were to reinstate the insurance.

    At this point, I am trying to get an idea of how others write off their charities, to help me cut my losses where I can!

    - Matt
  6. k1768

    k1768 Senior Member
    from NJ
    Messages: 556

    How it was explained by my accountant, if services rendered valued at $100, then it's a $100 charitable donation and is treated as any other charitable donation.

    As far as any slip and fall or other potential claim I would not risk it. My personal experience has clearly shown just because a business calls themselves a church and people call themselves Christians, a church is still a business and will do what is needed to protect their own interests and when push comes to shove some Christians are just as conniving and backstabbing as anyone else.

    Ask yourself if you are willing to risk everything you have if something goes wrong.
    Triple check with your insurance company, maybe even spend the $100 or so for a consult with a lawyer.

    Just my opinion based on my real life history. Your results may vary.
  7. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    My costs all roll together for tax purposes, we do some "true donations" to our clients causes as well, for instance the YMCA invest in youth campaign. I try to minimize how much we do as freebies, my brother has a saying that seems to always ring true "no good deed goes unpunished". I'm always extra careful doing freebies because that always seems where we break something or hit something.
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Cash donation is best ,keeps it separate. That's what I do.
  9. maxwellp

    maxwellp PlowSite.com Addict
    Messages: 1,123

    I was told by my Tax place that I can't just use the value of the service. I can only take what it cost me. So they said charge them a fair price and give back all or part of it. I do have another driveway I do for free because the guy looks like he will drop dead from a hart attack. He tries to pay me but I will not take it. I am just happy that I am in good health. He got me a plow job last year from a rental place next door. Call it what you want, but "it" will come back to you, could be good or bite you in the azz. I prefer the way this one worked out.
    It may be time to let them pay for real for a year, then they will know what they had. You can't always give it away. :)
  10. diesel nomad

    diesel nomad Junior Member
    Messages: 3

    Thanks so much for the feedback, guys!

    I guess I will write it off as "a lesson learned" for this year, claiming my actual expenses at tax time. It's hard to put a price tag on lost opportunity (every time I go out, I'm losing income by taking time away from my paying work, in addition to expenses incurred while pushing snow), but next year I won't be repeating the mistake. If I do have a paying plow route, I'll work the charity jobs in, but I'm not building a charity route again.

    I like the idea of billing a fair "charity price" and then donating it right back to the cause, and will keep that in mind if I run into this again in the future.

    RLM, I know what you mean about freebies coming back to bite you. While I haven't run into it with the plowing, I did construction and remodeling for a while, and the clients that I would try to do favors for always seemed to require more effort and attention than customers that were paying full price. Funny how that works!

    - Matt
  11. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,780

    I agree and if you do it right and enough sometimes it makes the paper and gives back to you...[​IMG]
  12. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Maybe you should of made the check out for 2,996.00 and bought yourself a good pair of shoes!Thumbs Up
  13. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,780

    :laughing:They were good when I started my day...
  14. javaboy

    javaboy Junior Member
    from Alaska
    Messages: 24

    I am not a lawyer or tax professional but I don't think that is entirely correct. I just went through this for my wife. A different profession. She volunteers 100's of professional hours. I was thinking we could deduct it but in fact we can not.

    Assuming that the organization is qualified charitable organization only expenses you accumulate are tax deductible. Those would include vehicle use (set at $.50 a mile - not sure how this works with plowing), salt, sand, etc. But I do not believe it would include anything like the cost of the plow as you can use that for your other work. Your bill able time is not a deductible.

    Here is a article on it: http://womeninbusiness.about.com/od/probonoservices/f/Pro-Bono-Services-Tax-Deductions.htm

    The IRS also has a publication however it is about 15 pages long and in IRS speak.
  15. javaboy

    javaboy Junior Member
    from Alaska
    Messages: 24

    The problem with that is when that is it is income which then you need to pay taxes on. So you bill $100. You get some and the gov't takes their cut. Then you donate $100 back you loose.
    Last edited: Mar 4, 2014
  16. linckeil

    linckeil PlowSite.com Addict
    from CT
    Messages: 1,272

    wait a minute - so some people actually make a profit plowing snow?
  17. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,780

    Nobody said that...they're just such a nice bunch that they give what they make away...:D