Most people know that certain donations made to nonprofit organizations may qualify for a tax deduction.
Did you know that volunteers—people who donate their time instead of money—may qualify for tax deductible expenses, as well? If you have regular volunteers or volunteers who occasionally assist with special events, you may want to let them know about possible deductions at tax time.
While there are no deductions for the actual hours volunteers put in, volunteers may appreciate having information about deductible expenses.
Expenses Your Volunteers Can Deduct
Here’s what the Internal Revenue Service (IRS) will allow volunteers at nonprofits to deduct from their taxable incomes:
- Car and transportation expenses. Volunteers can deduct car and transportation expenses incurred to get back and forth from home to the office or to meetings or other sites (such as a special event or to deliver food to homebound senior citizens). Volunteers who drive can choose between deducting actual gas and oil used, or they can take a mileage deduction of 14 cents per mile. They can also add in parking fees and tolls. However, volunteers cannot claim general car repair and maintenance expenses, depreciation, registration fees or the costs of tires or insurance.Volunteers taking public transportation can deduct subway, bus or taxi fares.
- Travel expenses. Under certain conditions, the volunteer can deduct travel expenses such as airfare, accommodations and meals, when performing services away from home. These conditions might include trips to attend a convention or board meeting and taking underprivileged youths on a camping trip. However, there are important limitations: The volunteer cannot gain significant personal pleasure, recreation or vacation from the travel.
- Other out-of-pocket expenses. Volunteers may deduct other expenses they incur during their volunteer work. For example, board members might deduct unreimbursed phone, postage and copying charges associated with preparing for meetings. Volunteers at an animal shelter can deduct the treats that they’re asked to provide in order to help train dogs during walks.
- Uniforms. If you ask volunteers to purchase a uniform—for example, an apron identifying them as a hospital helper—they can deduct both the purchase price and any upkeep costs. However, the uniform must not be suitable for everyday use. Also, your organization must require the volunteers to wear the uniforms while performing services.
Limits on Deductions
The following limitations apply to these deductions:
- The organization must be a qualified, IRS-recognized charity.
- In order to take these deductions, volunteers must itemize their deductions on their tax return.
- Volunteers cannot double-dip by claiming expenses for which the nonprofit already reimbursed them.
- The expenses must be directly related to the volunteers’ work, and incurred only because of that work.
- The expenses can’t be personal or for family (such as meals for children while they accompany the volunteer to a convention).
- Volunteers must keep reliable written records of the expenses.
Finally, Don’t Give Tax Advice
Although volunteer coordinators can make volunteers aware of potential tax deductions, we do not want to get into the business of giving personalized tax advice. Instead, suggest that volunteers talk to a tax professional or read IRS Publication 526, Charitable Contributions (at www.irs.gov, click on publications). In this publication, the IRS includes sections titled, “Volunteers’ Questions and Answers” and “Out-of-Pocket Expenses in Giving Services” that will help answer related questions or concerns.
Source: NOLO
www.nolo.com
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