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, such as telephone calls, stamps and stationery, as well as other materials that you supply, say, to prepare posters or other forms of advertising for fund-raising 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 and the Boy and Girl Scouts, require 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 babysitters 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 U.S. Tax Court has held that babysitting 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, fund-raising 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 and claim them as travel expenses. 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, tunnel and 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 on September 23 retroactively increases the rate to 29 cents for August 25 through August 31 and 34 cents for September 1 through December 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 spent 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, include the entire rental charge with your other charitable expenses. Stay within the speed limit. The tax collectors draw the line at a deduction for a traffic ticket, even if you were on the way to teach Sunday school.
By Julian Block