Many photographers are asked to donate prints or to license photographs to charitable organizations for use in their fundraising efforts. So is any of that deductible on your tax return? It depends.
IRS Publication 526 explains the rules related to charitable contributions. You can download a copy from the IRS website.
Before you can deduct anything for your donation referenced here, you either have to itemize your deductions on a Schedule A (as opposed to taking the standard deduction) or you have to report the profit or loss from your photography business on a Schedule C (for a sole proprietorship) or on your company’s tax return. Your donation also must made be to a qualified organization (Publication 78 lists most qualified organizations or you can check the charitable organization’s status with the IRS at 1-877-829-5500).
If you meet the above criteria, you may deduct the smaller amount of either the costs of the donated item (paper, ink, CD) or the fair market value of the property at the time of donation. The fair market value generally is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all of the relevant facts.
In most cases, the costs of the donated print or photo will be less than the fair market value. For photographers who have an established photography business, they most likely already have deducted the costs (materials such as ink, paper and CDs) as business expenses and cannot again deduct the contribution. The hobbyist photographer who does not deduct photography materials for a business is the only one who really benefits from this situation.
What about your time and talent that it takes to take the photo? Publication 526 specifically states that you cannot deduct the value of your time or services.
You’re also out of luck if you donate your entire copyright to a charity. IRS Form 8899 provides that you cannot deduct as intellectual property a copyright held by a taxpayer whose personal efforts created the property.
What can you do if you want to help the charity? Charge your normal fees for your work and otherwise make a direct cash donation to the charity. Or just donate your work and be satisfied with using your talents to help others.
When dealing with tough tax issues, it is always best to personally consult with a certified public accountant or tax attorney. You also can contact the IRS directly for help at 1-800-829-1040.
Take my advice; get professional help.
Check Photo Attorney on Lynda.com, in the Lynda.com Article Center, and on Twitter!