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Volunteer Work? There May Be a Deduction for That

Posted by McDonald & Osborne Posted on Oct 12 2015

If you participate in volunteer work for a charity, you may be entitled to some tax breaks.

Although a deduction is not allowed for a contribution of services, the Internal Revenue Code does allow some deductions for out-of-pocket costs incurred while performing the services. The expenses are treated as direct payments to the charity and are generally subject to the 50% of adjusted gross income limitation as an itemized deduction. The deduction generally includes items such as:

  • Away-from-home travel expenses while performing services for the charity include round-trip travel costs, taxi fares and other costs of transportation between the airport and hotel, plus lodging and meals. (Meals are subject to the 50% limitation.) However, if there is a significant element of personal pleasure associated with the travel or if the services you perform for a charity involve lobbying activities, these expenses are not deductible.
  • The cost of entertaining others on behalf of a charity , such as “wining and dining” a potential large contributor, are deductible but the cost of your own entertainment or meal while entertaining prospective donors is not deductible.
  • If you use your vehicle while performing services for a charity you may deduct the actual unreimbursed expenses for gas and oil directly attributable to the services. Alternatively, you may deduct a flat $0.14 per mile for charitable use of your car. In addition to these expenses, you may also deduct parking fees and tolls incurred. General expenses such as depreciation, license and registration fees and insurance are not deductible.
  • If you wear a uniform when doing volunteer work , you can deduct the cost as long as the uniform has no general utility. You can also deduct the cost of cleaning the uniform.
  • Additional examples of unreimbursed expenses deductible as contributions include equipment, copying charges, office supplies, long distance charges and postage .
  • No charitable deduction is allowed for a contribution of $250 or more unless it is substantiated by a written acknowledgment from the charitable organization The acknowledgment must include the amount of cash, a description of any property contributed, and whether you got anything in return for your contribution If you received anything from the charity in return, the acknowledgement must include a good faith estimate of the value of the goods and services the donor received and a disclosure that only the net amount is deductible.

  • The documentation requirement could present a problem where you, as a volunteer, make a contribution on behalf of, rather than directly, to a charity. One way around this is for the charity to pay for the expenses, and then be reimbursed by you. If this isn’t possible, you can safe guard your deductions as follows:

    • Get written documentation from the charity about the nature of your volunteering activity and the need for related expenses to be paid. For example, if you travel out of town as a volunteer, get a letter from the charity explaining why your’re needed at the out-of-town location.
    • If you are out-of-pocket for substantial amounts, you should submit a statement of expenses and, preferably, a copy of the receipts, to the charity, and arrange for the charity to acknowledge in writing the amount of the contribution.
    • You should maintain detailed records of your out-of-pocket expenses – receipts plus a written record of the time, place, amount and charitable purpose of the expense.

    If you have additional questions regarding the deductibility of your volunteer work or the substantiation requirements, please feel free to contact our office. We would be happy to assist you with any questions you may have about deductions related to your charitable contributions.

    Angela Krape
    CPA
    alkrape@mo-cpa.com

    Photo Credit: BigStockPhoto.com