If you're fortunate enough to be able to provide pro bono legal services, you may be wondering whether federal law allows any income tax deductions for your good work in that regard. More precisely, the question is whether the value of your time, services, and incidental expenses incurred providing pro bono legal services can qualify as a "charitable contribution" that is deductible from gross income on your federal tax return.
The Value of Your Time or Services
First things first. You cannot deduct as a charitable contribution the value of your time or labor spent providing pro bono services. But before you give up on getting any tax break, consider the other costs you may have incurred in your pro bono work. If the expenditure primarily benefited the charitable organization rather than you, it may be deductible.
You can deduct the cost of traveling to and from pro bono activities, and if you're gone overnight, meals and lodging as well. However, if the travel involves a significant element of personal pleasure, recreation or vacation, the costs are not deductible.
Travel costs include all transportation-related costs, such as those for taxis, trains, or other fares between hotel and airport or station. Reasonable tips for hotel employees may also be deductible.
Meals related to charitable travel are not subject to the 50 percent disallowance that applies to business expenses.
Use of Your Own Property
You won't be able to deduct the cost of purchasing property you own that is used in providing pro bono services, nor can you deduct its fair rental value or depreciation. That is, no part of the purchase price of your car, the rental value of your home, or the cost of that copy machine you brought can be deducted, no matter how much you used it for pro bono purposes. However, expenses directly related to the use of property to provide pro bono services are deductible if they are necessary to provide those services. An example would be the maintenance costs for the copier.
Other Unreimbursed Costs
Many direct expenditures on pro bono activities are deductible. Make sure you keep records of what you spent on unreimbursed office supplies, voice and data communication, filing fees, postage, advertising, and broadcasting. A deduction for expenses incurred in lobbying on behalf of the organization for a legislative change is not allowed.
You may be thinking about getting the charitable deduction by having the charitable organization pay you and then turning around and donating an equal cash sum back. This is not a great idea. Although you would get the deduction, you would also have the additional taxable income. The deduction won't cover the taxes you pay on that income, and it may even send you into a new tax bracket.
Consult your state tax code to see if it contains an allowance for charitable contributions and if different rules apply. As always, hire a tax professional in cases of uncertainty.