Tax Credits for Volunteering Costs

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Volunteers in the United States can receive tax deductions from the federal government on many costs associated with volunteering, such as mileage and other travel expenses, paper, copying, convention attendance fees, parking, uniforms (if the volunteer purchases his or her own), etc. These deductions apply ONLY if you are NOT getting reimbursed for these expenses by the organization you are assisting, and you are itemizing on your tax form (not if you use the 1040 EZ form).

Please note that the information given here is for general reference only. If you have questions about your situation, please consult a tax professional, or download IRS Publication 526: Charitable Contributions for complete information on this topic. Revised in 2000, provides official guidelines on what expenses can and cannot be deducted from your taxes.

Time and Travel

Hours spent volunteering are not deductible. Pro bono consulting may be, if you have a bill for the time you contributed performing work that, as a professional, you are usually paid for. Many agencies and pro bono consultants handle this situation by having the consultant bill the agency, then the agency pays the bill, and the consultant donates that money back to the agency. Talk with an accountant for more information.

From IRS Publication 526-Charitable Contributions:

"Contributions you cannot deduct at all include contributions made to specific individuals, political organizations and candidates, the value of your time or services and the cost of raffles, bingo, or other games of chance. You cannot deduct contributions that you give to qualified organizations if, as a result, you receive or expect to receive a financial, or economic benefit equal to the contribution.

Although you cannot deduct the value of your time or services, you can deduct the expenses you incur while donating your services to a qualified organization. If the expenses are for travel, which may include transportation and meals and lodging while away from home, they may be deducted only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Actual costs of gas and oil can be deducted, or you can choose to take 14 cents per mile for using your own car."

Remember that most agencies do NOT reimburse volunteers for costs associated with volunteering. If you think you are going to incur a cost because of a volunteering task, get approval from the agency first; there may be a way to work it out so that it's not necessary for you to incur costs at all. Even if the organization cannot reimburse you, they may want a written record of your expenses, to document the costs of volunteering.

Mileage

When volunteers drive their own vehicle to carry out a task for the organization, the IRS permits them to deduct $.14 per mile. The business rate for mileage is $.31. Organizations that reimburse the volunteer at the higher rate can put the volunteer in a precarious tax position, according to Senator Frank Murkowski (AK-R). He reports that the IRS has been trying to collect taxes on the difference. Some tax payers have been subjected to penalties and interest for mileage reimbursement for their volunteer miles.

Murkowski has introduced S1208, a bill that would exclude from taxes any reimbursements made by nonprofit organizations that exceed the $.14 rate. The rate of reimbursement cannot, however exceed the business rate limit. The bill has been referred to the Committee on Finance and is part of the large Senate Tax Bill S1429. Updates about this bill can be found on the Web.