Can You Deduct Donated Services? Let’s Clear Up the Confusion

If you've ever donated your professional services to a charity or nonprofit, you might wonder, "Can I deduct this on my taxes?" While your generosity is admirable, the tax rules might not be as rewarding as you'd hope. Let’s break it down.

No Deduction for Services

The IRS does not allow you to deduct the value of your time or services, even if donated to a qualifying 501(c)(3) organization. This rule exists to prevent overestimations or inflations of service value, ensuring fair tax practices for all.

What You Can Deduct

Good news! While your time isn’t deductible, certain out-of-pocket expenses incurred while providing services are. These include:

• Mileage: If you drive to an event or service location, you can deduct charitable mileage at $0.14 per mile (2025 rate).

• Supplies or Materials: Items purchased specifically for your donation, such as art supplies for a charity workshop or prints for a photography session, are deductible.

• Payments to Others: If you paid an assistant or subcontractor to help with the service, their wages for the event qualify as a deduction.

Where to Deduct These Expenses

For sole proprietors or single-member LLCs, these deductions do not count as business expenses. Instead, they must be claimed on your Personal Schedule A under itemized deductions. If you take the standard deduction, unfortunately, these expenses won’t impact your tax return.

Documentation is Key

To ensure compliance and maximize your deductions:

• Save receipts, mileage logs, and proof of payment.

• Request a donation receipt from the organization detailing your contribution.

• Maintain proper records in case of an IRS audit.

Plan Your Charitable Giving Wisely

While donating services may not provide a direct tax benefit, tracking related expenses can still make a difference. If you have questions about maximizing your deductions or structuring your charitable giving efficiently, CapriCPA.com is here to help!

Contact us today for expert tax guidance and personalized financial advice. Let’s make sure your generosity aligns with smart tax planning!