boston.com Business your connection to The Boston Globe
Boston.com tax guide 2007
What's newFind a CPAFiling formsTax tips
Volunteers: Don't Pass Up The Opportunity To Deduct Out-Of-Pocket Expenses

If you do volunteer work for a charitable organization and haven't kept track of your out-of-pocket expenses, you?re passing up an excellent opportunity to lower your tax bill, reports the Massachusetts Society of CPAs. Whether you have volunteered your time all year or are planning to do so over the holidays, the costs associated with your volunteer work may add up to a tax deduction.

To qualify, your unreimbursed out-of-pocket expenditures must relate directly to the charity. Additionally, you must itemize your deductions on your tax return. Here's some specific advice from CPAs on what you can and cannot deduct.

INCIDENTAL EXPENSES

Volunteers may deduct the cost of phone calls, postage stamps, stationery, computer paper, and other out-of-pocket costs incurred with their volunteer work. For volunteers who are required to wear a uniform, the cost of buying and cleaning is deductible if the uniform is unsuitable for normal wear. For example, if you volunteer as a nurse for a local charity, you can deduct the cost of buying and cleaning the uniform. However, if a charity asks you to wear black pants and a white shirt, you probably can't claim deductions since these clothes can be worn outside of work.

HOURS SPENT VOLUNTEERING

The cost of your time, no matter how valuable it may be, is not deductible. That's true even if you would normally be paid for the type of service you contribute. For example, attorney who perform free legal work for charities are not eligible to deduct what they would normally charge for their services.

TRANSPORTATION BY CAR

Using your car in connection with volunteer charitable work can earn you a deduction. The standard mileage rate for volunteers who use their own cars is 14 cents per mile. Alternatively, you may deduct your actual unreimbursed expenses for gas and oil -- but not maintenance, depreciation or insurance. Regardless of which method you choose, related parking fees and tolls are deductible as well.

OVERNIGHT TRAVEL AWAY FROM HOME

If you pay your own way when you travel overnight for a charitable purpose, your out-of-pocket expenses are deductible as long as they are reasonable in amount and are not for personal pleasure, recreation, or vacation. For example, if you attend a meeting away from home on behalf of the charity, but spend part of the time sightseeing or visiting friends, you're probably jeopardizing your entire deduction.

Keep in mind that enjoying your volunteer work doesn't rule out a deduction. For example, if in your role as a Girl Scout leader you take your troop on an overnight camping trip, your transportation and out-of-pocket expenses are deductible as long as you are "on duty in a genuine and substantial sense throughout the trip," in the view of the Internal Revenue Service.

Deductible travel-related expenses include round-trip travel costs, transportation at your destination, lodging and meals. Basically, a volunteer who travels away from home overnight can deduct the same types of expenses that may be claimed by a worker who makes a similar trip for business with one important exception: The volunteer traveling overnight for charity may deduct all meal costs. Volunteers are not subject to the 50% limit that applies to business meal deductions. However, expenses incurred by a spouse who is not involved in the volunteer effort are never deductible.

Special rules apply to conventions. Travel and other out-of-pocket expenses related to attendance at a convention for volunteers are deductible only if you have been chosen as a delegate to represent the organization. Attending a convention simply as a member of the organization does not entitle you to deduct your expenses.

If you decide to join the growing trend toward dedicating vacation time to a cause, don't count on deducting your expenses without consulting with a CPA. Expenses related to volunteer vacations that involve, for example, mornings spent maintaining wilderness sites or building homes in third-world countries with afternoons free for recreation and sightseeing, do not qualify as deductible expenses.

RECORDKEEPING

CPAs point out that you should be able to substantiate your expenses by showing the connection between the expense and the volunteer work performed. You should also have receipts or canceled checks to back up your deduction. Special rules apply if you incur $250 or more in expenses on behalf of a charity. In such cases, you'll need to have a written receipt from the charity in hand before your return is filed. For additional information, see IRS Publication 526, Charitable Contributions. The form can be found on the IRS website at www.irs.gov.
SEARCH THE ARCHIVES