Dog Health Questions: If I donate a service product, can I deduct the value of that as a donation on my taxes?

I have a dog training business and will be giving scholarships to people that adopt a dog from the local shelter. Can I deduct the value of those classes from my taxes? If necessary I could probably get a receipt from the shelter, as they are a 501c3 organization.

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Recommended Answer:
You are donating time and time has no value to the IRS.

However, if you wish to write off the scholarships, you have to add the income in to your Schedule C (or other entity) and pay tax on it. Then you can take the value of the scholarship on your Schedule A.

Note that by doing it this way, you WILL pay taxes on the phantom income.

Helen, EA in PA

Dog Training Advice - Tips That You Can Use

• Your only deduction would be for your actual out-of-pocket expenses. The value of your labor is NEVER deductible. That makes perfect sense when you consider the fact that you''re not receiving any income for the services that you provide. Deductions offset income and if you have no income from the activity, there's nothing to deduct.


• Two reasons your donation cannot be deducted:
  
  1. Only money or property can be deducted as a donation. You are donating service.
  
  2. The donation has to be for the use of the charity. You are donating to people who adopt the pets.
  
  If you advertise your free offer in the shelter publication, you could deduct that as a cost of advertising.


• No, you can't deduct the value of your time. You can only deduct out of pocket expenses.