As photographers we are often presented with the wonderful opportunity to donate our talents to our local communities. Whether it is donating a free session to a school auction, or offering to photograph a local charity race, it feels good to give back, and it can be good for your business as well.
However, when tax time comes around, the question arises: What can you deduct in relation to that donation?
First, it’s important to note that your donation also must be made to a qualified organization. Most charities can provide you with proof of their status.
If the charity is a qualified organization, you may deduct the smaller amount of:
- the costs you incurred in the donation (paper, ink, USB)
- the fair value of the donation (the price at which the item would change hands between a willing buyer and a willing seller)
For photographers the lesser amount will almost always be the cost of the donated item.
Unfortunately, this usually doesn’t give you much to deduct. You may not deduct the value of your time or services. Only the costs incurred.
If you have an established photography business, you most likely already have deducted the costs as eligible business expenses, so there’s really no financial gain on the donation.
(For those of you looking for a little light reading, here’s a link to the rules for charitable contributions IRS Publication 526.)
Even though you will not receive much of a tax break for donating your time, in addition to it being a good way to give back to your community, donations can also be a great way to get your name out there.
For example, if you donate a session to a school auction, you may be able to set up a display to go along side it and a stack of business cards.
It may not be easy to quantify, but there’s real value in furthering your reach within your local market.
So keep on being generous – tax break or not, it’s good for your community, it’s good for your business…….and it’s good for the soul.