If your contributions to charity begin and end with check writing, you may be missing out on some satisfying volunteer opportunities – and a few tax deductions. IRS rules allow you a number of tax breaks for contributions other than cash that you make to qualified organizations.
Deduct Getting There and Back
You can deduct the costs of going to and from a location where you volunteer your services. You can also deduct the costs of driving for the organization – for example, to pick up or deliver items. To compute your deduction for charitable driving, use a standard mileage rate of 14 cents per mile or deduct the actual cost of your gas and oil. Either way, parking fees and tolls are also deductible.
Recoup Your Expenses
Out-of-pocket expenses you pay in giving services to a qualified organization may count as a charitable donation if you’re not reimbursed for them. For example, travel expenses such as transportation, meals and lodging are deductible as long as there is not a significant element of personal pleasure associated with them. You may also deduct the costs of buying and cleaning a uniform you’re required to wear while volunteering if it is not suitable for everyday use.
Expenses you can’t deduct include: child-care costs, even if they are necessary for you to volunteer, contributions to a specific individual, the value of your time or services, and appraisal fees to determine the value of donated property.
No Time To Volunteer?
Many charities accept noncash donations. Giving investments that have increased in value can be a smart tax move. Instead of selling the investment and paying capital gains tax, give it to a qualified organization. If you held the investment for more than one year, you generally can deduct its fair market value at the time of the donation. Remember that you’ll need a receipt from the organization to claim a tax deduction and other records also may be required.
Some Restrictions
Contributions must be made to qualified organizations that meet IRS guidelines. Not sure? The IRS provides an online tool (Exempt Organizations Select Check) on its website (www.irs.gov) or you can call the IRS at 1-877-829-5500 to verify an organization’s charitable status.
Consult your tax advisor for more information on charitable donations.