Ask Stacy: Can I Take a Tax Deduction for Charity Work?

Chances are good that millions fewer Americans will enjoy a deduction for charitable giving on next year's tax return. Here's why.

Ask Stacy: Can I Take a Tax Deduction for Charity Work? Photo by Monkey Business Images / Shutterstock.com

Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is about taxes. The reader wants to know if she can deduct the time she donates to charity.

Whether it’s time or money, donating to charity is always a worthwhile thing to do. But here’s something you may not know: Thanks to the new tax law, a lot fewer people will be racking up a tax break in exchange for their generosity.

Watch the video and you’ll understand why.

For more information on this topic, check out “Beware These 10 Common and Costly Tax Mistakes” and “41 Free or Cheap Ways to Give to Charity.” You can also go to the search at the top of this page, put in the words “taxes” or “charity” and find plenty of information on just about everything relating to this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hey, everyone, and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Here’s our question for today. It comes from Robin:

“Can you write off on your taxes doing any community service work?”

I’m not really sure what Robin means by community service work. In order to be deductible, contributions have to be made to an IRS approved charity. That means a charity that conforms to the Internal Revenue Service code section 501(c)(3). So if you’re working with — or donating to — a charity, just ask: “Are my contributions deductible?” If they say yes, you should be in good shape.

(Note: While donations to most 501(c)(3) organizations are deductible, that’s not universally true. There may also be organizations that aren’t 501(c)(3) that can accept deductible contributions. To see if an organization is recognized by the IRS, you can check out a searchable database at this page of the IRS website.)

Back to Robin: I think what she’s asking is if the labor she donates while doing community service work is deductible.

Here’s the deal, Robin. You can’t write off time you donate to a charity. For example, say you’re a lawyer and you charge $200 an hour for your time. You donate an hour’s worth of your time to help out a charity. You don’t get a $200 write-off.

There are other things you can write off, though. You can deduct the cost of supplies you contribute. You can deduct mileage while working for a charity: $0.14 a mile in 2018.

Here’s something new you need to know: Just because charitable contributions are deductible doesn’t mean you’ll get to use them to reduce your taxes.

In order to deduct charitable contributions, you have to itemize allowable expenses. Starting in 2018, courtesy of the new tax law, every married couple gets $24,000 as a standard deduction; single taxpayers get $12,000. Because of these new, larger standard deductions, far fewer people will be itemizing. No itemizing, no charitable contribution write-off.

While this big standard deduction will help most of us, it’s a bummer if you’re a charity. Since fewer people will get a deduction, it’s expected that fewer people will contribute. One source I read suggested only 16 million Americans will itemize this year versus 37 million who itemized in 2017.

Of course, we hope the only reason we contribute to charity isn’t simply for a tax write-off. We hope we donate because we’re trying to help our fellow man, beast or cause when we’re contributing to charity. But it’s going to be harder for a lot of Americans to get that tax write-off this year and going forward.

I hope that answers your question, Robin. Let’s conclude with our quote of the day. It comes from Bob Dylan, the legendary songwriter and singer.

“Money doesn’t talk, it swears.”

Have a profitable day, and I’ll meet you right here next time!

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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Stacy Johnson
Stacy Johnson @moneytalksnews
I'm the founder of Money Talks News and have spent the last 40+ years in the personal finance trenches. I'm a CPA, author of a few books and multiple Emmy recipient. I'm ... More

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