While interviewing one of my new clients this year the topic of the amount of time they volunteer at a non-profit organization came up. They were expressing how they felt they should get some type of charitable deduction for the time they donate to the organization, but I had to explain that the IRS does not allow a deduction for the value of your time as a charitable contribution.
However, I then started asking more questions as to what they do for the organization and what types of things they pay for out-of-pocket while volunteering and this opened up a whole new avenue for additional charitable deductions.
Apparently my new client is a group leader for the organization and uses her own vehicle to transport members of the organization to different outings held at campgrounds, amusement parks, museums, baseball games and other such venues. I then explained how the mileage they are driving for the charity is actually a charitable deduction they can take on their tax return. Now while the business mileage reimbursement rate set by the IRS for 2010 is $.50 per mile, charitable mileage reimbursement is set at a lower rate of $.14 per mile for 2010 and that still was significant in my client’s case.
According to the IRS, travel expenses such as transportation, meals and lodging are all deductible if there is not a significant element of personal recreation or vacation in the travel. I stress that these costs need to be directly related to the charitable work you are doing. If the main reason for a trip you take is personal and you also happen to do some work for a charity along the way or while you are at your destination that does not make all or part of your trip qualify for a charitable deduction.
The next topic my client and I discussed were the costs that they paid out-of-pocket for their own admission into the various venues they brought groups to while volunteering for the charitable organization. I explained how all of the tickets or admission that she paid for her own entry into these venues qualified as a deduction. It is important to note that only their own ticket/admission was deductible and anything they paid for someone else to attend (whether it was a dependent or an unrelated party) was not deductible.
Lastly we discussed the uniform my client was required to wear while volunteering for the organization. The cost of purchasing the uniform and anything paid to clean/maintain it is also deductible. The main thing the IRS brings up with this situation is that the uniform cannot be suitable for everyday wear. A good example here is Girl Scout and Boy Scout troop leader uniforms. Since those types of uniforms are not for everyday use they are considered a deductible charitable expense as long as they are a required part of your volunteer work
Given the amount of time my client was volunteering to this particular organization they had racked up a significant amount of out-of-pocket expenses and charitable miles that were deductible on their tax return and it made a difference in their bottom line.
In the end my client may not have gotten the entire value of their time they had volunteered for the organization, but they did get some deductions and that made them very happy.
Always be sure that the organization you are donating services, money or property to is a qualified organization that the IRS will allow you to deduct charitable contributions for before you claim them on your taxes. I would suggest taking a look at IRS Publication 526 for additional information on what types of organizations qualify and what types of contributions qualify for charitable deduction purposes as what I have given here is a summary of one particular situation. You will need to research any similar contributions you think may be deductible or speak to a professional preparer before making a final decision as to whether they should be deducted on your own return.