Are Pro Bono Services Tax-Deductible?

A classic question

Every year, especially around tax season, I’m asked a classic question of whether or not you can write off services performed as a charitable donation. Pro bono service is work that you do or provide without charge. At its core, it’s a beautiful thing - designed to benefit a cause or for the good of the general public. Some expenses for performing pro bono services are tax-deductible, but many are not. Let’s set the record straight here. 

Volunteer hours are generally not tax-deductible. The Internal Revenue Service (IRS) is also particular about what constitutes professional services. Providing a service doesn't necessarily mean it constitutes pro bono work. You can't deduct the fees that you would normally charge for your services as pro bono services. You potentionally could take deductions for certain qualifying expenses on your tax return.

The IRS says

For example, you can't deduct $300 for two hours if you regularly charge $150 an hour for your services. The IRS indicates that you can't deduct the value of your services or your time that you spend helping others. However, you can deduct the incurred expenses when you give your time or services to others. 

Maybe you incurred a tangible expense because you paid an employee $500 to make a website template for a charity, then you gave the template to the charity for free. The $500 might be tax-deductible. But your time isn't tax-deductible if you're a marketing consultant and donate 50 hours to a charity to help them with their marketing. Your professional time is not deductible. Childcare expenses that allow you to provide pro bono services are also not tax-deductible, even if you wouldn't have been able to volunteer without childcare. 

Now let's say that you had to travel to the charity to meet with them. Typically, travel-related expenses are considered tax-deductible because they're tied directly to the donation of your professional services. It's not likely this will give you a significant tax break.

Do you qualify?

All pro bono deductions must meet two IRS qualifying rules: 

  • They must be incurred as a requirement to perform the service for the organization.
  • They must primarily benefit the charity and not the taxpayer.

An example would be the cost of necessary supplies to provide or perform the service that directly benefited the charity. If you make a charitable deduction, the burden is on you as the donor to prove that you donated. Save all the receipts from your expenses. Also, remember to get a receipt from the charity recording your donation. 

Never try to deduct the cash value of your services for professional or service fees without talking to an accountant. You won't be able to take any deduction for such fees in most cases.

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