Pro Bono Publico

Over the years I’ve been asked a lot of tax questions, considering that I’m not an attorney or an enrolled agent (tax preparer). For reasons that probably pass understanding, a lot of otherwise sensible people seem to believe that anyone who went to business school must know about these things, and that anyone working as a management consultant can also provide them with free information about finance, accounting, tax law, municipal law, recycling, charitable donations, green business, depletion of the ozone layer, the detailed management of every type of business that could possibly exist (whether or not it actually does), U.S. history, world history, engineering, high-energy physics, cooking, entertainment, script writing, movie production, education, squirrel migration patterns, the relative probabilities of everything from the success of their new business venture to how well their favorite team will do in the Super Bowl (or NBA Finals or World Series or Stanley Cup or World Cup) and whether their spouse is committing adultery and with whom they are doing so…

That said, probably the most common fallacy you encounter in the consulting business is that people who are self-employed (and free-lance consultants in particular) can write off time they donate to charity, since they are in effect donating their stock in trade. I try to avoid answering any of the questions referenced above (unless I actually know something about the question, and sometimes even then), but most of the time people don’t really ask me this; they just assume that I will be willing to donate MY time to their cause – since I can just write it off on my taxes and enjoy the deduction. Alas, this is not true. You can take a look at the annual Fox News story about things not to try deducting if you don’t believe me (it’s about two-thirds of the way down), but the simple fact is that I’m limited to deducting my mileage and any out-of-pocket expenses I can prove I made on the charity’s behalf, just like anyone else…

Unfortunately, most people who run non-profits (and especially small and/or recently-formed ones) generally know a lot more about the cause they’re incorporated to work on than they do about tax law, and I will almost invariably be accused of holding out on them. I always wonder if these are the same people who keep being prosecuted for trying to claim their home telephone land-line as a business expense (you can’t), deduct their clothing and dry cleaning bills as business expense because they wear those clothes to work (not allowed; IRS assumes that you would have to wear something regardless) or attempt to claim their pet as a dependent (a classic; not possible unless you’re a Warner Brothers cartoon character). Even the people who grasp the idea that trying to get me to help you because I have professional knowledge that could help you and then failing to listen to me when I tell you something is patently illegal is stupid will sometimes try to get me to try this anyway, in the hope that the IRS will miss it…

Now, before you accuse me of going all emo on you, keep in mind that most other professionals have the same problem. Some people (notably lawyers) do gain professional benefits from doing pro bono work; some are even required by their state bar association (or other professional organizations) to do so. But even if it was possible for me to get a break on my taxes by doing charity work, there would still be the matter of how do I make a living in the first place? If you’re asking me to moonlight for a charity I suppose I could use the tax break to offset withholding on my day job, assuming I could get such a break in the first place, but otherwise this is nothing more than an elaborate way of asking me to do something out of the goodness of my heart…