Making a Charitable Donation of Your Services? What Part is Tax Deductible?

Intro by Skip Cohen

There’s so much great content on the Internet, often hiding in the archives of some of the most respected artists in the industry.

I found this in Nicole Begley’s archives for her “Hair of the Dog” blog. The timing is perfect. We’re right in the heat of tax season and while Nicole openly admits she’s not a CPA, even with the ever-changing tax laws, she’s done a great job of getting all of us to think about our charitable donations.

What I love most about the topic is that it applies to all of us in business, no matter what our specialty might be. So, as you get ready to prepare your taxes and meetings with your accountant, read Nicole’s advice and questions, then make them a priority when you’ve got a tax expert sitting across from you!

By Nicole Begley

Donating to silent auctions continues to be one of my favorite marketing tools, even 5 years into my business. Why? They still bring me a steady stream of fabulous new clients!  

I strategically choose galas and events that have my target market. These are the galas with $150-$250 a plate dinners. I choose organizations that mean something to me and/or my target market.

It is a win-win-win. The charity receives a donation for their silent auction that they are usually thrilled to receive, which leads to them raising much-needed funds. The potential client purchases your services and receives a tax-deduction since it is a donation to the charity. They also feel good about their purchase since they are helping a charity they believe in. You gain a (hopefully) qualified new client who will most likely still spend a significant amount with your studio.

There is an entire series on Using Auctions to Market your Photography Business as one of the first posts on this blog. The information contained in those posts is still very pertinent. However, I have had 3.5 years to grow and evolve my craft so please don’t look too closely at the images! EEK!

Here is a more recent one to make me feel better…..

One area of confusion for many photographers is determining what is tax deductible from their charitable donation.

I often see photographers deducting the full retail value of their session and products from their taxes as a charitable donation. Uncle Sam does not approve.

We cannot deduct our time or our retail costs, only our hard costs. If you have a $150 session fee and are donating a 16×20 canvas that retails for $475 but costs your business $100….you deduct $100. If you have a $150 session fee, sell your digital files for $750, and are donating a session and the digital files…you may only deduct the cost of the CD or USB. Pennies.

You are permitted to count your miles traveled for the charitable donation as a deduction at the standard mileage deduction.

The other detail that is often overlooked is when do you claim your deduction? When you donate the item or when it is claimed? Thankfully the government has made that easy and it is deducted in the tax year that it was donated to the charity, regardless of when it is claimed by the client.

I hope these two little caveats clear up some confusion on the tax implications of auction donations. As with any tax advice, I must issue a disclaimer…I am not a CPA.

There is no substitution for having an accountant help you with your business taxes. Our tax code is almost 75,000 pages long. That is pretty much disgusting and nearly impossible to navigate on your own. Your CPA will likely save you money on your yearly tax bill and if you were ever audited it would certainly be nice to have a professional standing by.