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The Magic Cafe Forum Index » » Tricky business » » Charity shows for tax purposes (0 Likes) Printer Friendly Version

Salazar Magic
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New Jersey
344 Posts

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Don't get me wrong. I have not lost sight of the real reson for charity. But, I would like to know what the steps are for doing shows you can "write off"?
Andy Wonder
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Auckland, New Zealand
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I can't see that there would be any tax benefit to performing a charity show. If you write off the fee you usually charge you need to have first counted that fee as a sale to have to write off. You can't write off a sale unless it is a sale first. They cancel each other out, leaving no net change in your accounts, except for any expenses you incurred in performing the show.
Smile

I also would rather perform some charity shows than give my money to the IRS, but unfortunately it does not work that way.
Andy Wonder, Auckland, New Zealand
Timothy
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Alabama, USA
174 Posts

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Check into a mileage deduction if you drive to the event. I think the IRS allows so much per mile.
Salazar Magic
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New Jersey
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If I charge a fee, would it be a non-taxable income? Or at least write off my expenses in doing the show?
ralphdean
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Northern Ca
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You can always write off your expenses against a paid show. You are in business, and being paid to perform.

If you are paid, it is income and should be claimed.

If you are not paid, and it is for a charity, you can write off your expenses for that show as a donation to the charity. You can not write off the fee that you would have charged if you were paid.

Now doing volunteer work at a hospital I think, counts as charity work.
cgscpa
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Ashton, MD
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I agree with ralphdean. However, if you are performing for charity as a way to promote your business as a magician then the case could be made that the expenses incurred would be a business expense such as advertising or marketing. If you're not a professional (i.e. it's not a business) and doing this to help the charity, then the expenses incurred would qualify for the charitable deduction (if you itemize your deductions).
RayBanks
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Nassau Bay, TX
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Here are some hints from an accountant I know.

1. Get paid for the show at your regular rate by the charity.

2. Deposit the check.

3. Write a check for the amount of the fee back to the charity.

Here's what you get: Undisputable evidence of the value of your 'donation' to the charity. And of course you can always deduct your expenses from your total income.

Of course this is assuming you live in the US of A and pay taxes.

Smile
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Pick a card, any card...No. not THAT one...THIS one

Ray Banks
cgscpa
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Ashton, MD
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One potential problem with getting paid and then donating the same amount back:

Generally speaking, while the two may "wash-out" for income tax purposes (assuming you are itemizing your deductions and thus deduct your charitable contributions) you would be subject to self-employment taxes (social security) on the amount received, net of expenses. This also assumes that your magician business shows a net profit and you are operating as a sole proprietor. So you could pay 15.3% in self-employment taxes on money that you turn around and donate back to charity!
RayBanks
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Nassau Bay, TX
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cgscpa

What you say is true. If you have a business you should fill out Schedule C which allows you to expense business items including donations whether or not you itemize deductions on your personal return. Remember you only have to report the net profit on your individual return.

My point was if you are audited and you show a donation deduction for doing a show, which is acceptable, you could say your fee was $4,000.00 instead of the $400.00 you would probably get for the same show elsewhere.

My method is just a way to prove the value of your show should it be required.
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Pick a card, any card...No. not THAT one...THIS one

Ray Banks
cgscpa
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Ashton, MD
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Ray -

Timely discussion with the beginning of tax season upon us.

One quick point in using your method. To deduct the charitable contribution as a business expense on Schedule C the contribution should be made in exchange for advertising. Donating the fee back- as admirable as that is- without some sort of service performed by the charity will have an auditor wanting to re-class the business expense as a charitable contribution (if one is even audited). I have had this issue come up before when representing a client before the IRS.

If you can't make the donation in return for some sort of advertising- and one does want to help out the charity- I would recommend simply doing the show pro-bono or at a reduced fee. Then everyone wins, except the IRS. Smile
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