Tax deductions

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So this may be a stretch, but.....can you deduct team fees on your taxes? Most teams are set up as a non-profit, can that be considered a donation? I know there are some enrichment activities like theater and the like that can be deducted if they are operated by a non-profit, so my kid is enriched on the diamond as opposed to the stage, can I too deduct? Just curious.

 

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The answer is no. I'm an accountant by trade but not a tax accountant, so I may not give the right explanation but two things ...

1) Not all nonprofits are charities as defined by the IRS

2) Anything you give to a charity that you get something in return for is not tax deductible. Team fees are typically used to enter tournaments, buy uniforms or equipment, pay coaches, etc. ... so your daughter is getting something in return. Now if part of the team fees were going to a charity, say for example, Stay in Softball, then that part would be deductible. And if the organization is set up a charity, and someone not directly benefiting gives money, then these might be deductible ... but no, if say your parents (the player's grandparents) give money and that somehow offsets your daughter's fees, that isn't deductible for them either.

 

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Thank you Sir, I figured, but had to ask. That's why I pay someone to do my taxes.

 

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I pay someone too!

 

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I was told if you do automatic donations to like United Way then get the tax I'd of the org and have all of your amounts go to a specific group and they are 501c3, it is possible. I have never done it but it was explained that way to me.

 

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I think it is possible to claim it and reduce the chances of it being "caught" but, if audited and they figured out what it was actually for, you'd owe the tax savings back along with penalties and interest.

 

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I would agree! Thats why I havent pursued that tax savings for a potential bigger fine.

 

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I know of someone that created a legal entity (LLC). He was the President and daughter was an employee. The daughter gave lessons, hitting and fielding, under the LLC. They were able to write off the expense of travel under the LLC. They also were able to take the fees paid as a business expense. They did take a loss every year. But having the LLC really helped with the expenses.

 

[WalkOffHR]

And she lost her amateur status and is now ineligible to participate in scholastic sports...if she is caught

 

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I know of someone that created a legal entity (LLC). He was the President and daughter was an employee. The daughter gave lessons, hitting and fielding, under the LLC. They were able to write off the expense of travel under the LLC. They also were able to take the fees paid as a business expense. They did take a loss every year. But having the LLC really helped with the expenses.

Did the LLC have other income besides the DD and money from her parent(s)? If not, the tax savings on the DD's income would have to justify the expense of the LLC.

I don't see any issues with amateur status. Maybe with OHSAA?

 

[WalkOffHR]

From the NCAA compliance manual:

The NCAA prohibits student-athletes from owning and operating their own camps or clinics. However, student-athletes are often asked to participate in camps and clinics in a variety of ways. It is not permissible for a student-athlete to receive compensation just for appearing, lecturing or demonstrating at a camp or clinic.

Seriously...can one imagine what kind of cars college football players would be driving if they could get paid to "instruct" at local camps and clinics? They can't even charge !1 for an autograph without being subject to loss of eligibility.

 

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Student-athletes are ones currently in college and the athlete in the post didn't own anything. NCAA does allow them to get paid for working at camps and giving lessons - they're just restricted from advertising their college connection. Here's an example - Jen Schroeder employs athletes to give lessons at her facility and camps - https://www.facebook.com/JenSchroCatching.

 

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Some relevant excerpts from the D-I manual (I underlined to highlight key points)...

12.01.3 ?Individual? vs. ?Student-Athlete.? NCAA amateur status may be lost as a result of activities prior to enrollment in college. If NCAA rules specify that an ?individual? may or may not participate in certain activities, this term refers to a person prior to and after enrollment in a member institution. If NCAA rules specify a ?student-athlete,? the legislation applies only to that person?s activities after enrollment.

12.4 Employment.
12.4.1 Criteria Governing Compensation to Student-Athletes. Compensation may be paid to a student-athlete: (Revised: 11/22/04)
(a) Only for work actually performed; and
(b) At a rate commensurate with the going rate in that locality for similar services.
12.4.1.1 Athletics Reputation. Such compensation may not include any remuneration for value or utility that the student-athlete may have for the employer because of the publicity, reputation, fame or personal following that he or she has obtained because of athletics ability.
12.4.2 Specific Athletically Related Employment Activities.
12.4.2.1 Fee-for-Lesson Instruction. A student-athlete may receive compensation for teaching or coaching sport skills or techniques in his or her sport on a fee-for-lesson basis, provided: [R] (Revised: 1/9/96 effective 8/1/96, 4/25/02 effective 8/1/02, 4/2/03 effective 8/1/03)
(a) Institutional facilities are not used;
(b) Playing lessons shall not be permitted;
(c) The institution obtains and keeps on file documentation of the recipient of the lesson(s) and the fee for the lesson(s) provided during any time of the year;
(d) The compensation is paid by the lesson recipient (or the recipient?s family) and not another individual or entity;
(e) Instruction to each individual is comparable to the instruction that would be provided during a private lesson when the instruction involves more than one individual at a time; and
(f ) The student-athlete does not use his or her name, picture or appearance to promote or advertise the availability of fee-for-lesson sessions.
...
12.4.3 Camp/Clinic Employment, General Rule. A student-athlete may be employed by his or her institution, by another institution, or by a private organization to work in a camp or clinic as a counselor, unless otherwise restricted by NCAA legislation (see Bylaw 13.12 for regulations relating to camps and clinics). Out-of-season playing and practice limitations may restrict the number of student-athletes from the same institution who may be employed in that institution?s camp (see the specific sport in Bylaw 17 for these employment restrictions and Bylaw 13.12).
12.4.4 Self-Employment. A student-athlete may establish his or her own business, provided the student-athlete?s name, photograph, appearance or athletics reputation are not used to promote the business. (Adopted: 12/12/06)

13.12.2 Employment at Camp or Clinic.
13.12.2.1 Student-Athletes. A student-athlete may be employed in any sports camp or clinic, provided compensation is provided pursuant to the criteria of Bylaw 12.4.1. A student-athlete who only lectures or demonstrates at a camp/clinic may not receive compensation for his or her appearance at the camp/clinic. (Revised: 4/24/03 effective 8/1/03, 1/19/13 effective 8/1/13)
13.12.2.1.1 Self-Employment. A student-athlete with remaining eligibility is not permitted to conduct his or her own camp or clinic. [R] (Revised: 4/24/03 effective 8/1/03)