Tax Breaks for Charity Volunteers

February 9th, 2010

If you volunteer your time for a charity, you may qualify for some tax breaks.  Although no tax deduction is allowed for the value of services performed for a charity, there are deductions permitted for out-of-pocket costs incurred while performing the services.  The normal deduction limits and substantiation rules also apply.  The following are some examples:

• Away-from-home travel expenses while performing services for a charity, including out-of-pocket roundtrip travel cost, taxi fares, and other costs of transportation between the airport or station and hotel, plus lodging and meals are allowed at 100%.  Unlike other areas of taxes, meals are not subject to the 50% limitation.  These expenses are only deductible if there is no significant element of personal pleasure associated with the travel, or if your services for a charity do not involve lobbying activities.  Any “significant element of personal pleasure” negates a deduction (i.e., not even partial deduction is allowed).  Significant personal pleasure is assumed if the taxpayer has only minor duties and is not required to perform any duties for the charity for major portions of the away-from-home stay.

• The cost of entertaining others on behalf of a charity, such as wining and dining a potential large contributor (but the cost of your own entertainment or meal is not deductible).

• If you use your car while performing services for a charitable organization, you may deduct your actual unreimbursed expenses directly attributable to the services, such as gas and oil costs, or you may deduct a flat 14 cents per mile for the charitable use of your car.  You may also deduct parking fees and tolls.

• You can deduct the cost of the uniform you wear when doing volunteer work for the charity, as long as the uniform has no general utility.  The cost of cleaning the uniform can also be deducted.

No charitable deduction is allowed for a contribution of $250 or more unless the contribution is substantiated with a written acknowledgment from the charitable organization.  To verify your contribution:

• 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, request a letter from the charity explaining why you’re needed at the out-of-town location.

• Submit a statement of expenses if you are out-of-pocket for substantial amounts and, preferably, a copy of the receipts to the charity.  Also arrange for the charity to acknowledge in writing the amount of the contribution.

• Maintain detailed records of your out-of-pocket expenses – includes receipts plus a written record of the time, place, amount and charitable purpose of the expense.

Please call us if you have questions related to your volunteer expenses or any other charitable contributions.

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