Is Free Reiki a Charitable Contribution?

Christian | Standing Stones Healing Co.

I sometimes give away free Reiki sessions. Could these be considered a donation? Can I count them as a charitable contribution on my taxes? 

This is a great question. I want to preface it by saying that I am not an accountant, tax lawyer, or tax professional, and this answer does not constitute tax, legal, or financial advice. But I feel confident that the short answer is...no.

Here's why:

To take a charitable deduction on your taxes as a business depends on what kind of business you are. The majority of US-based Reiki businesses have pass-through taxation. This means that you put your Reiki business earnings on your personal 1040 tax form and the IRS treats you and your Reiki business as one. The chances are good that your Reiki business is pass-through taxation, since this is true for sole proprietors or single-member LLCs. Even if you don't officially have a formally filed Reiki business and are operating as a sole proprietor, any Reiki business earnings would be added to your personal 1040. 

To my knowledge, any charitable contributions you (or your Reiki business) would make would be reflected on the charitable contributions section of your personal 1040...not on your business expenses. Schedule C is where businesses deduct expenses, and there is no charitable contribution category on Schedule C. This means it can't be counted as a business expense. Corporations have different taxation and can easily deduct charitable donations. Disregarded entities (pass-through Reiki businesses) cannot.

The only way your Reiki business could possibly deduct charitable expenses is to list the amount of the donated sessions under the individual charitable contributions section of your 1040. Except, to my knowledge, donations are limited to non-profit organizations and not individuals.

So, in order for free Reiki sessions to count as a charitable contribution, they would have to be offered to a non-profit and the non-profit would have to provide you with a letter stating the amount of the in-kind (not cash) donation.

Except...to my knowledge, the IRS doesn't allow charitable deductions for services, at least not for the value or your time. You could possibly deduct any expenses related to the free sessions, such as mileage, but the sessions themselves can't be deducted, even if they are for a non-profit and even if you receive a letter verifying your contribution. So for sure the answer is a resounding no. Sorry!

Some might think you could get around this by deducting the cost of a session not as a charitable contribution, but rather as an advertising expense because the free session is like a free sample. Retailers give away free product samples all of the time, so can't Reiki practitioners give away free sessions and deduct that expense?

Sorry, the answer is again no. The free session wasn't something that your business paid for in order to be written off/deducted. Yes, perhaps you paid for it with your time, but the IRS only cares about actual money spent. In a product giveaway, the product itself has already been paid for by the business and money has already been spent. The IRS doesn't care about your time...sorry!

Again, this is based on my knowledge and there are lots of professionals out there who know better than I do, so you may want to check with them. But I feel confident that counting free sessions as an expense, whether charitable or otherwise, doesn't fly with the IRS. 

Let's be honest: tax stuff is tricky and can feel scary and overwhelming. That's why federal taxes for US-based Reiki businesses is broken down into easy and simple terms in the Build Your Reiki Business program. So you can get how it all works and get on with the sessions!

You might also be interested in the free Reiki Biz Kit and Reiki Business Plan Guide.