Here at Activate Good, we often extol the many virtues of volunteering: learning new skills, meeting new people, and especially the personal satisfaction of making an impact in the community! But did you know there may also be some tax savings benefits to volunteering? The federal government recognizes the importance of community service and permits those who itemize their deductions to deduct certain costs associated with volunteering on their tax returns.
Accounting for Volunteering on Your Tax Return
First off, make no mistake about it; the IRS prohibits taking a deduction on your federal income taxes for the value of volunteer work. This means that you generally cannot deduct the value of your time, services provided, or income lost when you performed unpaid work for a charitable organization.
Although the value of volunteer time is not tax-deductible, in most circumstances volunteers who itemize their deductions may deduct the direct, unreimbursed expenses they incur while volunteering. Examples include phone calls, postage stamps, stationery, and certain travel expenses. For 2012, a volunteer may deduct 14¢ per mile when using a personal vehicle to do volunteer work. If a volunteer travels and must be away from home overnight, reasonable payments for meals and lodging as well as transportation costs are deductible. If a volunteer is representing the organization at a conference or convention, out-of-pocket travel costs may be deductible. However, the volunteer may not deduct travel expenses as charitable gifts if there’s a significant element of personal pleasure, recreation, or vacation in the travel. But enjoying the volunteer work doesn’t rule out a deduction!
Keep A Record
A word of caution: It’s up to the volunteer to substantiate the deductions if the IRS questions them—and be prepared to prove costs with canceled checks, receipted bills, diary entries, mileage logs, etc. The volunteer should also be ready to show the connection between the costs and the volunteer work. If unreimbursed expenses are $250 or more, the volunteer must also obtain a written receipt from the charity.
The tax aspects and reporting requirements for all charitable gifts depend on individual circumstances. For more information, see IRS Publication 526 – Charitable Contributions. http://www.irs.gov/pub/irs-pdf/p526.pdf As with any donation, you should consult with your personal income tax advisor about your particular tax situation.