Question: Can you write off donated services to a charity?
Answer: No, you cannot deduct services or your time donated to a charity.
The IRS is very clear about this in Publication 526, Charitable Contributions, which states:
- You can’t deduct the value of your time or services
- You can’t deduct blood donations to the American Red Cross or to blood banks
- You can’t deduct the value of income lost while you work as an unpaid volunteer for a qualified organization
Can you write off donated services?
Think about this logically. If you were allowed to deduct the value of your time or services, that would be so subjective and that would create a tax nightmare for the IRS. If this were allowed, I would value my services at $8,000 per hour. Why stop there? Why not make it $75,000 per hour? I would then definitely volunteer an hour for a $75,000 charitable contribution deduction.
But no, that’s not how it works. You can only deduct out-of-pocket expenses associated with your volunteer work. For example, if you had to drive from location-to-location for your involvement in a charitable donation or participation, then you get to deduct mileage expense. If you incurred expenses of purchasing supplies as part of carrying out your donated services, then you can deduct that as well.
If I can’t write off my services donated to a charity, then why does the charity issue me a receipt letter?
This “in-kind donation letter” is a “catch-all” receipt for anything donated other than monetary donations (such as clothing, food, cars, etc…). It’s a perfectly valid receipt if you donated physical goods (besides your own blood). It’s pretty much worthless if you donated services. Yet, they can still give you the “in-kind donation letter” because you still donated something other than money. So there’s nothing wrong or illegal about it, it’s just a little slimy of them to trick you like that or give you misleading information. So if you’re here reading this and the only reason why you donated your time and services was for the tax deduction, you just got played for a fool.
Many organizations do this knowingly to falsely incentivize you to provide your services for free, it’s ultimately free labor to them. The IRS has been trying to crack-down on organizations that intentionally mislead people and prey on uninformed people, but the IRS has other priorities.
Please read the fine-print of the in-kind donation letter. You’ll see it says “your donation may not be tax deductible, please consult your tax advisor”. Your tax advisor will tell you the same answer.
Therefore, can you write off donated services? No.
We definitely encourage your goodwill and we also support the donation of your time and skillset to help the needy. But you should do it out of the goodness of your heart, not for the tax deduction, because there isn’t one to be had.