There is no such thing as business donations… I know, but check out our blog to understand how to handle various donation situations (sometimes it could be categorized as something else if structured properly). Otherwise, donations must come out of personal funds and CAN be deducted from your personal tax return. If you raise donations through your books, we will make it an owner draw.

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Charitable Donations 101 — Bastian Accounting for Photographers

Services: Not a Tax Deduction

When it comes to donating services—the IRS does not allow businesses to claim a tax deduction. This is because services cannot be easily valued in the same way that cash or goods can. The tax code specifically allows deductions for cash and property but not for the time or expertise given away.

Why?

The rationale behind this rule is primarily about fairness and practicality. Valuing donated services consistently and fairly would be complex and subjective, creating challenges for tax enforcement and compliance. Instead, the IRS focuses on deductions for tangible items with more objective value. So for example, you can only deduct the expenses that you actually pay for. Your time is not a deduction. If you were to pay for prints from the business those would be deductible because they are considered tangible items.

In-Kind Donations:

In-kind donations refer to contributions of goods, services, or other non-cash items instead of money.

Types of In-Kind Donations

1. Goods:
   • Products: Items like prints or albums
2. Services:
   • Professional Expertise: This includes your services to provide an end-project

Tax Implications

While in-kind donations cannot always be deducted in the same way as cash contributions, there are some specifics to consider:

• Goods: For donated goods, businesses can often claim a deduction based on the fair market value of the items. Specific rules and valuation guidelines apply, so it's essential to keep accurate records.
• Services: Generally, the value of donated services cannot be deducted for tax purposes. However, businesses can sometimes deduct related expenses if they are directly tied to the service provided (e.g., travel costs).