If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill.
How to get a tax break
To qualify, your unreimbursed expenses must relate directly to the charity, and you must itemize your deductions on your tax return. Here is a brief rundown of what to keep in mind:
- Charity-related out-of-pocket expenses may be deductible. Volunteers may deduct the cost of postage stamps, supplies and other out-of-pocket costs incurred in their volunteer work. For volunteers who are required to wear a uniform, the cost of buying uniforms is deductible if they are unsuitable for everyday wear.
- Time volunteered in not deductible. The cost of your time, no matter how valuable it may be, is not deductible. That’s true even if you would normally be paid for the type of service you contribute. For instance, accountants who perform free consulting for charities can’t deduct what they would normally charge for their services.
- Using your car in connection with volunteer work can earn you a deduction. The standard mileage rate for volunteers who use their own cars is 14 cents per mile. Alternatively, you may deduct your actual unreimbursed expenses for gas and oil, but not maintenance, depreciation or insurance. Either way you choose, related parking fees and tolls are deductible, as well.
- Overnight travel for charitable work may be deductible. If you travel overnight for charitable purposes, your expenses are deductible as long as they are reasonable in amount and not connected with personal activities or any element of recreation.
- Special rules apply to conventions. Travel and other out-of-pocket expenses related to attendance at a convention for volunteers are deductible only if you have been chosen as a delegate to represent the organization.
Finally, just remember that it is up to you, the volunteer, to substantiate your deductions. If you take these deductions, you should be prepared to show the IRS the connection between the costs claimed and the charitable work performed. Keep records!
Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.