Pro bono work—short for pro bono publico, meaning “for the public good”—is when professionals offer their expertise free of charge to benefit individuals, organizations, or communities in need. This practice is common across industries like law, consulting, and marketing, where skilled professionals use their time and talents for causes they believe in.
One common question many people ask themselves is, “Can you write off pro bono work?” While donating services might seem like it should qualify for a write-off, the rules surrounding tax deductions for pro bono work are more nuanced.
In this article, we’ll explore whether pro bono work is tax-deductible, what qualifies for deductions, and offer practical tips for navigating the rules.
Understanding these guidelines can help you maximize the financial and social benefits of your contributions while staying compliant with tax laws.
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Is pro bono work tax-deductible?
“Sadly, no,” says Matthew Argyle, a chartered financial analyst, certified financial planner (CFP), and IRS-enrolled agent. “Donating your time is noble, but only what you spend—like gas, supplies, or software—satisfies the IRS.” The IRS draws a clear line between time and money, allowing deductions only for quantifiable out-of-pocket expenses.
The rationale is fairness and consistency. “They take this stance to be fair, clear, and consistent to everyone,” Argyle says. “Limiting deductions to quantifiable expenses eliminates an enormous source of discrepancy—the mushy value of services. Expenses, on the other hand, can be quantified and verified without discrepancy.”
For example, the perceived worth of an hour of legal advice can vary significantly from an hour of graphic design, leading to inequities and complications if services were deductible.
Pro bono work vs. volunteering
Though often used interchangeably, pro bono work and volunteering differ in critical ways. Pro bono work typically involves professionals providing specialized services—like legal counsel, financial planning, or design—free of charge to those in need. Volunteering, on the other hand, is broader, encompassing any unpaid activity that contributes to a cause, such as serving meals at a shelter or planting trees.
Despite these differences, according to Argyle, the IRS applies the same standard. Whether you're a freelancer or a full-time employee, the principle remains the same: “The IRS only cares about money leaving your wallet, not the value of your time.”
Expenses related to pro bono work
Unreimbursed expenses related to your pro bono work can be deducted, provided they are properly documented. The types of expenses you can deduct depend on whether you’re an employee, a freelancer, or a firm.
- Freelancers and employees: Out-of-pocket expenses such as mileage, printing, software, or subcontractor costs can qualify if the charity acknowledges your contribution and you keep detailed records.
- Firms: “A firm who employs financial planners can continue to deduct the employment expenses incurred by the firm for the time their employees spent doing pro bono work,” Argyle says. “Forgone revenue—money you could have earned but chose not to—can’t be deducted, but the explicit expense of payroll is.”
Now, let’s take a closer look at some examples of deductible expenses:
- Travel expenses: Mileage logs for driving to client meetings or public transit fares directly tied to pro bono work.
- Supplies and materials: Office supplies consumed and materials used to deliver the service and required specifically for the charity’s needs. “Think paper, printing, postage,” Argyle says.
- Professional tools and fees: “If a financial planner or planning firm incurs costs associated with subcontracting parts of the work, those can be deducted,” the CFP says. “For example, hours spent by an assistant, subscription fees for services like Holistiplan, or the cost of outsourced financial planning by firms like SimplyParaplanner or Fractional Planning.”
Non-deductible expenses
When it comes to pro bono work, there are strict IRS guidelines about what does not qualify as deductible. Here's what you can't write off:
- Value of donated services: The IRS doesn’t allow you to deduct the fair market value of the professional services you provide, regardless of how valuable they are to the charity.
- Time spent performing the work: Even if your time has a high hourly rate in your industry, the IRS doesn’t recognize it as a deductible expense.
- General business costs: Expenses like utilities, office rent, or internet are typically not deductible unless they’re directly and exclusively tied to the charitable work you performed. For example, if you set up a specific room in your home to work exclusively on a charity project.
Navigating IRS rules and avoiding red flags
Navigating IRS rules for pro bono work deductions requires careful documentation. Argyle advises maintaining:
- Receipts and invoices: Keep a record of all out-of-pocket expenses like supplies, printing, or software used for pro bono work.
- Mileage logs: Document travel-related expenses meticulously, including the dates, destinations, and purposes of trips related to the work.
These records ensure that deductions can be substantiated if questioned by the IRS, avoiding the risk of penalties or audits.
Avoid common deduction mistakes
According to the expert, one of the biggest errors professionals make is attempting to deduct the value of their services, which is not allowed under IRS rules. Missteps also include claiming non-deductible personal expenses, like unrelated meals or casual trips during charitable work. Argyle offers examples of non-deductible expenses: “For example, if you didn’t capture the mileage, or you made a pit stop to grab lunch with a friend and then attempt to write it off.”
How to steer clear of audits
Claiming excessive or poorly documented deductions is one of the most common triggers for an IRS audit. To avoid this, ensure your claims are precise and directly tied to the pro bono work.
Misclassification of general business expenses, such as utilities or rent not exclusively used for charitable work, can also raise suspicion. Keeping clear, organized records and adhering strictly to IRS guidelines can help you navigate the rules while staying compliant.
Tips for professionals doing pro bono work
Pro bono work is a great way for professionals to give back to the community, build their reputation, and grow their careers. That said, staying organized and being smart about taxes is key to avoiding stress and staying on the right track. Here are some practical tips to help you manage the financial side of your pro bono efforts.
Consider working with a tax professional
Working with a tax professional, especially one familiar with your industry, can streamline the process of identifying deductible expenses and navigating complex IRS rules. These experts can also help ensure you’re not overstepping boundaries or missing out on legitimate deductions. For example, they might guide you on how to structure your records to substantiate claims, which is crucial if the IRS ever audits your filings.
Leverage tools to track expenses
Apps like QuickBooks, MileIQ, or Expensify allow professionals to log mileage, categorize expenses, and upload receipts in real time. Beyond ensuring compliance, these tools minimize the chances of errors or lost documents and significantly reduce the stress of preparing for tax season.
Count pro bono time toward professional goals
Argyle also highlights that time spent on pro bono projects can count toward professional goals: “If a financial planner is working toward fulfilling a practice-hour requirement for a professional designation like the CFP Boards’ 4,000-hour requirement, the time spent doing pro bono work absolutely counts,” he says.
Set aside dedicated time to review and update your records
Establishing a monthly habit of reviewing and updating your financial records can help you stay organized and avoid the last-minute rush at year-end. This proactive approach ensures your finances are in order, minimizes stress, and allows you to focus on the rewarding aspects of your pro bono efforts while maintaining tax compliance.
Do good work
While you can’t write off the value of your time, it’s important to note that pro bono work isn’t just about financial deductions. “The goodwill and growth from pro bono work can be invaluable—both for your community and your career,” Argyle says. “Pro bono work pays dividends in skills and community impact.” These intangible benefits could lead to new opportunities and long-term career growth, making pro bono work a valuable investment.
To maximize your deductions and stay compliant, consider consulting with a tax professional who understands the nuances of your field. With expert advice and the right tools to track your expenses, you can make the most of your pro bono efforts—both ethically and financially.