How to Get Tax Breaks for Volunteer Work
If you’re looking for meaningful ways to help others, strengthen your community or advance worldwide causes, volunteer work may be the solution. Plus, doing good work for others can also be good for your wallet.
No matter if you volunteer in your hometown or in a foreign country, many expenses you incur can benefit your tax return. Here are five basic rules to know about claiming tax deductions for charity work.
Rule #1: You must volunteer for a qualified organization.
In order to claim a tax deduction for charity work, the organization must have tax-exempt status. Although most public charities, churches and nonprofits are qualified with the IRS, many are not—so double check a group’s tax status.
One way to know if a charity is exempt is to ask the organization for a copy of the IRS letter showing their tax status. Another is to do a search using the Exempt Organizations Database on the IRS website.
Rule #2: You can’t deduct the value of your time.
Expenses you incur—such as uniforms, supplies, postage and meals—while you volunteer are tax-deductible, as long as they aren’t reimbursed by the charity. Deductible expenses must be tied directly to the service you provide to the organization and can never be personal.
However, the IRS doesn’t allow you to deduct the time you spend doing volunteer work. You can’t assign a value to your time or services and deduct it on your tax return.
Rule #3: You can deduct travel expenses when you volunteer.
If you travel during volunteer service, your airfare, ground transportation, parking, tolls, meals and lodging are also tax-deductible. However, this is only the case when doing charity work is the primary reason for your trip.
When you use a personal vehicle to get to and from the place you volunteer, that’s also deductible. You can choose to deduct the value of your gas and oil, or you can keep a log of your miles and take a deduction based on the IRS charitable standard mileage rate.
However, you’re not allowed to deduct ordinary auto expenses such as insurance, maintenance, tires or depreciation, as if you were using your vehicle for business.
Rule #4: You can’t deduct expenses for others’ charity work.
If you pay charity expenses for a family member or friend, that’s a terrific gift, but it doesn’t qualify you for a tax break. For instance, if you pay a friend’s airfare so they can do missionary work overseas, you’re not allowed to deduct it on your tax return.
Rule #5: You must itemize tax deductions.
In order to deduct charitable expenses or contributions, you must itemize deductions using Schedule A (Form 1040).
While the amount you can deduct for doing good works may not add up to huge dollars, it’s still a great tax benefit of which every volunteer should be aware. You can learn more about how to take advantage of charity work and donations in IRS Publication 526, Charitable Contributions.
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