Taxpayers who volunteer for a charity are entitled to some very beneficial tax deductions. The first major rule to remember is that a taxpayer cannot take a tax deduction for the value of services performed for a charitable organization. A deduction is not allowed for the value of services contributed to the charitable organization. However, if you are active in such organizations, you should be aware that out-of-pocket expenses incurred while performing volunteer services are deductible as a charitable contribution. If you use your auto, you may also be able to deduct the standard mileage allowance of 14 cents per mile.
Tax Deductions for Performing Charity Work
For example, a lawyer cannot deduct what he would normally bill when he is conducting work for charitable organization. Allowing this type of deduction for valuing the services that taxpayers perform would be a mess for the IRS and most charities.
However, there are some very important tax deductions that are permitted for out-of-pocket costs incurred while performing charitable services. As always, these deduction amounts are subject to the deduction limit that generally applies to charitable contributions which is different depending on the charity and taxpayer.
Out-of-Pocket Costs Deductible for Charity Work
- Away-from-home travel expenses while performing services for a charity. This could include out-of-pocket round-trip travel cost, taxi fares and other costs of transportation. Remember, that these expenses aren’t deductible if there’s a significant element of personal pleasure associated with the travel for charity work. A taxpayer cannot disguise a personal vacation as doing charity work.
- Entertaining guests on behalf of a charity is deductible.
- Actual unreimbursed expenses directly attributable to using your car for charitable services, such as gas and oil costs. Alternatively, it may be easier to deduct a flat 14¢ per mile for charitable use of your car. Parking and Tolls are always deductible
- Special Uniforms that are worn for charitable work can be deducted.
Deducting Travel Expenses for Charity Work
Most common expenses related to travel are allowed. Here is what the IRS defines as deductible travel expenses:
- Air, rail, and bus transportation,
- Out-of-pocket expenses for your car,
- Taxi fares or other costs of transportation between the airport or station and your hotel,
- Lodging costs, and
- The cost of meals.
Deducting Car Travel for Charity
When it comes to using your own car for travel you can do one of two things. You may deduct the actual cost of gas used to get to and from the volunteer site, or you can deduct the IRS standard rate of 14 cents per mile. Unlike using your personal car for business, you cannot deduct expenses such as insurance, maintenance, or depreciation.
Substantiate Charitable Expenses for Deduction
No charitable deduction is allowed for a contribution of $250 or more unless you substantiate the contribution by a written acknowledgment from the charitable organization. The statement from the charity must include the amount of cash, a description of any property contributed, and whether you got anything in return for your contribution. It is absolutely necessary to get written documentation from the charity about the nature of your volunteering activity and the need for related expenses to be paid. Receipts should always be saved and taxpayers must be prepared to back up why they incurred the expenses on behalf of the charity.