Ask the Accounting Community

  • 1.  Tax Deduction for Exempt Employee Providing Additional Service

    Posted 09-17-2014 07:44 PM
    I was approached with the following scenario and need advice on my response:

    Scenario:

    Employee A works for the school and is exempt.

    Employee A has an LLC set up to teach yoga as a side business & charges $60/hr.

    Employee A teaches yoga to parents during school hours.

    Employee A does not receive their hourly rate when teaching to parents during the school day. Instead, parents donate to the school's annual fund.

    Can Employee A receive any form of deduction for providing this service to the school? 

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    William Kernan
    Controller
    Near North Montessori School
    Chicago IL
    United States
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  • 2.  RE: Tax Deduction for Exempt Employee Providing Additional Service

    Posted 09-18-2014 11:28 AM
    As long as this school is considered a non-profit such as a 501(c)3 status, then donations of materials such as a dozen yoga mats or mileage to the school on non regular work hours can be deducted. No business or personal deduction is allowed for the professional time donated.
    One caveat, if this is a Montessori school, some may be franchises (for profit) or company schools.
    If it is a for profit school, there would not be a charitable donation available, but materials used could still be a deductible promotion or marketing in hope of future customers, including mileage.

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    Terry Gelber CPA
    Accountant
    Terry H Gelber Tax & Financial
    Higley AZ
    United States
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