Time Contributed to a Non-Profit Organization
From TaxAlmanac
IRS Regulation 1.170A-1(g) specifically states, "No deduction is allowable under Section 170 for a contribution of services." In other words, if you donate your services to charity, you can't deduct it on your tax return.
True, you could "exchange checks" (i.e. you write a check to the charitable organization, and the charitable organization writes a check to you) for the value of your services. And this creates an "audit trail" that falsely disguises your donation of services as a financial contribution by you, and as a purchase of services by the charitable organization. But in substance it is still a donation of services -- and as such is NOT tax deductible.
[| Pub 526] has some helpful information on deducting the value of your time. Toby Joplin 10:39, 26 May 2005 (CDT) ----
Thanks Toby.
It seems like Pub 526 said "not deductible" to my question. What if my firm bill this non-profit organization? Then ... ... There got to be a way to deduct this contribution. Did anybody know how?
If your firm bills the non-profit then it will be income to the firm. Assuming you are the only owner and a soleproprietor then your income tax liability will almost be a wash if you already itemize and none of the itemized deductions are dependent on AGI. Could be other consequences out there for income tax purposes depending on individual circumstances. You will lose out though in the area of self-employment tax. If you are an S-corp it can be more of a wash all the way around. Again, it depends on your individual circumstances. I prefer to advise people to "exchange checks" with the non-profit organization if they want a tax deduction. Hope this helps. --Gregg Gillaspy, CPA, CFP 21:29, 27 May 2005 (CDT)
Gregg, thanks a lot for your analysis. Could you please explain a little more about exchange checks?
When I was in public accounting, we used to recommend "exchanging checks" as the cleanest method of securing a deductible charitable contribution. In essence, NP organization pays firm for services rendered (say $100) by writing a check. The firm, in turn, writes a check to the NP organization for a $100 contribution. Both organizations then have a paper trail to follow.
