If your contributions to charity begin and end with check writing, you may be missing out on some satisfying volunteer opportunities — and a few tax deductions. IRS rules allow taxpayers who itemize their deductions a number of tax breaks for contributions other than cash made to qualified organizations.
Deduct Getting There and Back
You can deduct the costs of going to and from a location where you volunteer your services. You can also deduct the costs of driving for the organization — for example, to pick up or deliver items. To compute your deduction for charitable driving, use a standard mileage rate of 14 cents per mile (2023 rate) or deduct the actual cost of your gas and oil. Either way, parking fees and tolls are also deductible.
Recoup Your Expenses
Out-of-pocket expenses you pay in giving services to a qualified organization may count as a charitable donation if you’re not reimbursed for them. You cannot deduct your personal expenses, such as child care costs, even if they are necessary for you to volunteer. You may, however, deduct the costs of buying and cleaning a uniform you’re required to wear while volunteering if it is not suitable for everyday use.
No Time To Volunteer?
Many charities accept non-cash donations. Giving investments that have increased in value can be a smart tax move. Instead of selling the investment and paying capital gains tax, give it to a qualified organization. If you held the investment for more than one year, you generally can deduct its fair market value at the time of the donation. Remember that you’ll need a receipt from the organization to claim a tax deduction and other records also may be required.
Some Restrictions
Contributions must be made to qualified organizations that meet IRS guidelines. Not sure? The IRS has an online tool, The Tax Exempt Organization Search Tool, that includes most qualified organizations. Another option is to call the IRS at 1-877-829-5500.
What You Can’t Deduct?
- Contributions to a specific individual
- The value of your time or services
- Personal expenses incurred while volunteering, such as the cost of meals (unless you must be away from home overnight)
- Appraisal fees to determine the value of donated property.
Consult your financial professional for more information on charitable donations.
