I’ve often had the opportunity to work as the volunteer accountant, trustee or adviser for some great charitable organizations. In the course of this work, I meet plenty of other like-minded generous people. One amazingly common misperception that many of these people share is a misunderstanding of the tax treatment of donated time or services. Often I find that people believe that they are allowed to take a tax deduction for the value of donated time and services.
U.S. federal income tax law is simple and clear on this issue: a donation of time, services or expertise does NOT generate a tax deduction.
Confirmation of the government’s position is discussed in IRS Publication 526 titled “Charitable Contributions”. Page 6 under the heading “Contributions You Cannot Deduct” says “4. The value of your time or services”. The IRS gives an example in question and answer format in a chart on page 5 of Publication 526:
Q: “I volunteer 6 hours a week in the office of a qualified organization. The receptionist is paid $10 an hour for the same work. Can I deduct $60 a week for my time?”
A: “No, you cannot deduct the value of your time or services”.
So here is a huge THANK YOU to all of the millions of Americans who donate their time and expertise to make the operations of our nonprofit organizations possible. Just be clear that it does not affect your taxes.