Are you an active volunteer for charitable organizations? The reward for helping out takes the form of deductions for out-of-pocket expenses incurred while you do volunteer work.
Write off only what you spend to cover unreimbursed expenses — for instance, the cost of telephone calls, stamps and stationery, as well as other materials that you supply, say, to prepare posters or other forms of advertising for fundraising campaigns.
Forget about any deduction for the value of the unpaid time that you devote to charitable chores. So if the prevailing rate for the kind of services you render is $100 per hour and you wind up spending 100 hours to render those services during the year in question, that doesn’t entitle you to take a write-off of $10,000 for them. While deductions are allowed for gifts of property, the IRS doesn’t consider your services to qualify as “property.”
Nor can you claim anything for the use of your home or office to conduct meetings. That, too, isn’t a contribution of “property.”
Some organizations, such as the Red Cross, require their volunteers to wear uniforms. Because these uniforms aren’t adaptable to ordinary wear, deductions are allowed for their cost and cleaning.
The IRS takes a dim view of deductions for baby sitters who watch children while the parents do charity work. The payments for sitters, concedes the IRS, are incurred to make the volunteer work possible. Nevertheless, the agency ruled that the payments are nondeductible personal expenses.
Take heart, though. An IRS administrative ruling is by no means the last word. It merely reflects the official IRS position on an issue and isn’t binding on the courts. The United States Tax Court has held that baby-sitting fees that enable you to get out of the house are allowable, just the same as car expenses linked to charitable work. An often missed outlay begins the moment that you leave your home. Allowable deductions include travel expenses to get to committee meetings, fundraising events, and so on. For travel to and from your volunteer work by planes, trains, buses or taxis, just make sure to keep track of your fares.
If you use your own auto, your two options are to deduct the actual cost of gas and oil or make the paperwork simpler by claiming a standard mileage rate of 14 cents a mile. Whether you use the mileage allowance or drive a gas guzzler and claim actual costs, remember to deduct parking fees and bridge or highway tolls, as well.
An example: In the course of your charitable work this year, you drive 1,000 miles and shell out $50 for parking charges. Your allowable deduction is $190 (1,000 miles times 14 cents equals $140, plus $50 parking). Or, if you pay more for gas and oil than the mileage allowance, you can deduct actual costs, plus parking.
For charity work related to Hurricane Katrina, legislation enacted Sept. 23 retroactively increases the rate to 29 cents for Aug. 25 through Aug. 31 and 34 cents for Sept. 1 through Dec. 31.
It’s a good idea, in case an IRS examiner questions charitable travel, to be able to support deductions with a glove-compartment diary in which you record why and how far you went, as well as what you spend on parking. You don’t have to use the same car each time and can use more than one car at the same time. If you rent an auto and drive it only for charitable travel.
E-mail Julian Block at email@example.com.
UNITED FEATURE SYNDICATE INC.