I'm a freelance graphic designer, can I use some work I did for the community as a tax write off?

Question

I designed a new sign to out in front of a housing development. It took me about 10 hours to design the sign.

Answer 1

No, you may never take a deduction for the value of your own time.  You may deduct any out-of-pocket expenses that you incurred but that is all.

(You are not being taxed on the income you never received, so how could there be a "deduction" from income you never received?)

Edit:  The law is VERY explicit.  You may NEVER deduct the value of your own labor.  PERIOD.

Answer 2

You cannot get a deduction for donating something until you have paid your dues to the IRS for acquiring it.  You can donate things or money to a charity and get a deduction because you are considered to acquired the thing or money and have paid any taxes due for acquiring it.  The same goes if you paid someone else to design the sign, as you would have paid them with your assumed post-tax dollars.

If you were paid to design the sign, but returned the money to them you would have to pay income and then tax an itemized deduction for your later charitable contribution of the money.  By donating your time to the charity you forgo the deduction, but also get out of the income tax.  

This issue is most prominently discussed in regard to celebrity appearances at charitable events.  If the person attends with no intention of getting paid, there is neither income nor a deduction.  

Answer 3

You can not take a deduction for your time.  That would be like deducting it twice.

If you invoiced for your time, were paid, and then gave the money back, you can deduct that donation.

But, if you received no money, you can not deduct the value of your services. Since there was no price tag on the services, there is nothing to deduct.  

Here is a clear example, using your line of thinking:   Say there was a doctor that worked for six months, and charged regular fees.  Then, the doctor worked six months at a clinic, for free.  If the doctor deducted the time donated, then the doctor would have no taxable income.   This is not correct.  The doctor would have to report the income from the first six months, but the second six months is not deductible.  However, the doctor would be able to deduct expenses, like travel to and from the free clinic, etc.

Your question is a good one. This concept was explained in detail, when I took tax law at U of MD.

Answer 4

No, you can not claim value of time as contribution deduction.

Also any charity deduction is itemized deduction. You will go for itemized deductions only when your deductions are more than standard deduction. Read: http://taxipay.blogspot.com/2008/05/item...