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Tax Write-Offs For Free (As In Speech) Work?
deuist writes "Several years ago I wrote a book called The Not So Short Introduction to Getting Into Medical School (PDF) and released it online under a Creative Commons license. I have been asked several times to publish the text so that I can make money off of it. The book has become quite famous among pre-med students and is now available from the Princeton Review as a free CD that is given to pre-medical interest groups. My question to the Slashdot community involves claiming this work as volunteering for tax purposes. Have any of you had any success with releasing free software and then writing off your time when April 15 rolls around?"
You can't write off volunteer time. That would be double dipping. The good news is you don't have to pay taxes on the money you didn't earn while working on your book.
Imagine your time is worth $50.00 / hr. You could donate 100 hours of time by working for 100 hours for $5000. Then, you could donate the money back to the charity and deduct the $5000. Or, you could work for free for 100 hours and forgo the deduction. Both scenarios would put you in the same place tax wise.
On the otherhand, if you worked for free and took a deduction, you would essentially be taking the deduction twice. The IRS doesn't take kindly to this.
You can write off un-reimbursed business expenses and charitable contributions. Working on OSS projects does not qualify as either one unless your company is paying you to do this from home - then you can write off your router/internet/etc. as long as they are for business only. Driving to LUG - how does that fit? LUG is not a recognized charity, nor is 99.999% of OSS. Taxes on your home should be deducted as part of one of your normal itemized deductions; if you are taking another part of them for this OSS work, you are double dipping. Ask your CPA if he will pay the fines when you get audited? You may want to be ready with an alibi when IRS comes knocking - tell them you have a wireless router that has no encryption and someone was parked outside, posting to slashdot. Also, I would find a reputable CPA, as this one is giving you some bogus info.