If you are a volunteer worker for a charity, like a Cub Scout leader or a Kidsports coach for example, you should be aware that your generosity may entitle you to some tax breaks.
Although no tax deduction is allowed for the value of services you perform for a charitable organization, charitable deductions are permitted for out-of-pocket costs you incur while performing the services. This includes items such as:
- Away-from-home travel expenses while performing services (out-of-pocket round-trip travel cost, taxi fares and other costs of transportation between the airport or station and hotel, plus lodging and meals). Examples are travel as a coach or as an official board representative to a meeting. These expenses aren’t deductible if there’s a significant element of personal pleasure associated with the travel, or if your services for a charity involve lobbying.
- The cost of entertaining others on behalf of a charity, such as wining and dining a potential large contributor (but the cost of your own entertainment or meal is not deductible).
- You may deduct your actual unreimbursed expenses directly attributable to the services, such as car gas and oil costs. Alternatively, you may deduct a flat 14¢ per mile for charitable use of your car, plus parking fees and tolls, in either case.
- You may deduct the cost of a uniform you wear when you do volunteer work for the charity, as long as the uniform has no general utility (e.g., a volunteer ambulance worker’s jumpsuit). You may even deduct the cost of cleaning the uniform.
- You may also deduct costs for supplies consumed in the activity, such as cupcakes for a school class, or food for an animal shelter.
If the amount is less than $250 in any one occurrence you need only maintain records and keep receipts. Conversely, no charitable deduction is allowed for a contribution of $250 or more paid at one occurrence unless you substantiate the contribution by a written acknowledgment from the charitable organization. The required acknowledgment generally must include the amount of cash expended, a description of any property contributed, and whether you received something in return for your contribution. This presents a problem where you, as a volunteer make a contribution on behalf of rather than directly to a charity. One way around this dilemma is for the charity to pay for the expenses, itself, and then be reimbursed by you (or you can make the donation before the expense is incurred). If this isn’t possible, you can safeguard your deductions as follows:
- Get written documentation from the charity about the nature of your volunteering activity and the need for related expenses to be paid. For example, if you travel out of town as a volunteer, get a letter from the charity explaining why you’re needed at the out-of-town location.
- If you are out-of-pocket for substantial amounts, you should submit a statement of expenses and, preferably, a copy of the receipts, to the charity, and arrange for the charity to provide its standard acknowledge in writing.
- Note that appraisals are not needed for out of pocket expenses, since they are reported and treated as a gift of the cash expended.