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Deductions and Write-Offs

501c3 in kind donation writeoffs

I am the new treasurer of a 501C3. Very small horse ranch. We had a farrier (i.e. the person who handles horse shoes and hoof health) handle some work for us recently to the tune of 180$. She said she would like to go ahead and donate the services. I understand that she cannot "give" us 180$ worth of service and take a writeoff at the end of the year. Is it ok to pay her and then she donate 180$ back to us?

Answers:

First, thank you for your service! You are correct that she cannot “give” you $180 worth of service AND expect a write-off at the end of the year. This is a black and white issue. She can certainly donate her services, but she cannot get a write-off. The Internal Revenue Code never allows a donation for services or time. You can pay her, and she can donate the $180 back to the 501(c)(3); however, that’s not in the best interest of the farrier. She could end up paying more tax that way because she could be subject to both income and self-employment tax on the $180 of income. Then, she may or may not get the value of the $180 donation back to the organization. So tax-wise, it may not be a wash for her. It’s best for everyone if she simply donates her time and gets no write-off.

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