Sorry Swing I'm not sure how H&R Block is taking the deduction unless the charitable organization is writing you a donation for money received from you as a cash donation and used as a cash donation on your schedule A.
Self-employed people who file Federal Schedule C cannot take business-related charitable contributions as a business expense. For sole proprietors these are personal deductions and are deducted on Schedule A.
You cannot claim a tax deduction for time or services donated to a charitable organization.
· If you drop ten dollars into the collection basket at church: A deduction.
· If you donate your worn shoes to the Helping Hands Youth Shelter: A deduction.
· If you give 40 hours of your time "valued at $100 per hour" to the AIDS Walk, designing the advertising and promotional material: No deduction.
Only money or goods given to a recognized charity will result in a deductible charitable contribution. There's no way that the non-profit can credit you with a donation.
You can't give away something you never had. And if you don't receive a fee, well then you never had it to give away. So although you can donate your time "it's your time so you can give it away" you cannot donate the value of your time.
Here it is from a different angle: Charitable deductions on your tax return reduce income. Both income and the deduction must be tangible "money earned, money donated, shoes donated." If your time is worth $100 an hour and you receive no money for your time, then you have nothing tangible from which to deduct the value of your time. If your fees are $100 per hour and you worked for 40 hours for the non-profit you would have to claim the value of your time as income before you could deduct the $4,000 worth of services donated to the organization. But that doesn't amount to a deduction because it's $4,000 in and then $4,000 out — a wash.
Some non-profit organizations encourage people to donate services, assuring them that it is a tax-deductible donation. But services, another word for your time — are not deductible. Out-of-pocket expenses that you incur — such as supplies, telephone, transportation costs, can be deducted. I encourage you to give of yourself, doing so does create benefits, but will not reduce your tax burden because time and service are intangibles.
Publication 535 business expenses -
Charitable contributions. Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts. If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. See the Instructions for Form 1120 for more information. Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040).
Publication 542 - Scroll to page 13 charity -
http://www.irs.gov/pub/irs-pdf/p542.pdf
Donating time has never been deductible for personal or business tax write offs. Your tax person maybe getting creative using it on your Schedule A as a cash contribution and depending on how the organization wrote up the receipt it may pass through, but if it says anything about time donated and not cash contributed it is not usable.
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