Most people volunteer out of a sense of altruism, duty or purpose – not to get a tax deduction from Uncle Sam. At the same time, if your good deeds could also result in lower taxes, why not? Theoretically, this would free up more time to volunteer or let you make a charitable donation, a win-win for you and the cause you care about.
What Volunteering Expenses Can You Deduct?
As with all tax rules and regulations, the devil is in the details. If you itemize your tax deductions, you might be eligible for some valuable deductions. Any expenses deducted must directly relate to the charity where you volunteer, and you can’t have been reimbursed for them. Lastly, you will need to be taking the itemized deductions and not the standard deduction.
Below, we will look at the specifics of what you can and cannot deduct.
Time Spent Volunteering
Unfortunately, not. Regardless of how much time you spend volunteering, those hours have no economic value in terms of a tax deduction. Now, you may be saying: My time when I serve a client is billed out at $250 per hour. No matter, in this case, the IRS simply does not care. When it comes to donating your time as a volunteer, the only thing you get in return is a warm fuzzy feeling for doing a good thing.
Volunteering Expenses
Often, organizations ask volunteers to provide their own supplies and materials to carry out the work. Think of things like office supplies, for example. In other cases, volunteers will need to provide their own safety gear or a special uniform. All these types of expenses are deductible if you are paying for them out of your pocket and not getting reimbursed.
Cost of Commuting
Driving your own car as part of your volunteer work also can yield a charitable deduction. Under section 170, the IRS provides a standard rate of $0.14 per mile driven in 2022 and 2023. Alternatively, you can deduct the actual costs of fuel (i.e., gas or diesel) and tolls. Once again, it is deductible only if you are not reimbursed for the expenses.
Travel Expenses
Travel expenses related to volunteering also can be deductible. To qualify, the expenses must be directly related to the volunteer work; not have been reimbursed; and be reasonable. The definition of reasonable is of course open to interpretation and relative depending on the circumstances; however, taking a private plane or flying first class is unreasonable in the eyes of the IRS.
You also can deduct the cost of meals needed while volunteering at the full cost (100 percent). The 50 percent business limitations do not apply.
Fundraising Costs
Hosting a fundraising event can cost big bucks. For individuals generous enough to host such an event, it is completely legitimate to deduct your unreimbursed expenses for putting on the event.
Recordkeeping
Like any tax deduction for personal or business reasons, keeping good records is key. Keep track of mileage with a daily logbook, keep receipts, and note what, where, when, who, and why for each volunteer-related expense. This applies to any of the items above, from simple mileage to hosting an entire fundraising event.
Conclusion
Volunteering is a great way to give back to your community or a cause you care about. It also can be a source of additional tax deductions, which will put more money in your pocket to spend or use for charitable purposes as you see fit. If volunteering is part of you and your family’s life, consider the guidelines outlined above and talk to your tax professional about your individual situation.
Carion Doty LLP
How Volunteering Can Earn You a Big Tax Deduction
April 1, 2023 · Blog, Tax and Financial News
Most people volunteer out of a sense of altruism, duty or purpose – not to get a tax deduction from Uncle Sam. At the same time, if your good deeds could also result in lower taxes, why not? Theoretically, this would free up more time to volunteer or let you make a charitable donation, a win-win for you and the cause you care about.
What Volunteering Expenses Can You Deduct?
As with all tax rules and regulations, the devil is in the details. If you itemize your tax deductions, you might be eligible for some valuable deductions. Any expenses deducted must directly relate to the charity where you volunteer, and you can’t have been reimbursed for them. Lastly, you will need to be taking the itemized deductions and not the standard deduction.
Below, we will look at the specifics of what you can and cannot deduct.
Time Spent Volunteering
Unfortunately, not. Regardless of how much time you spend volunteering, those hours have no economic value in terms of a tax deduction. Now, you may be saying: My time when I serve a client is billed out at $250 per hour. No matter, in this case, the IRS simply does not care. When it comes to donating your time as a volunteer, the only thing you get in return is a warm fuzzy feeling for doing a good thing.
Volunteering Expenses
Often, organizations ask volunteers to provide their own supplies and materials to carry out the work. Think of things like office supplies, for example. In other cases, volunteers will need to provide their own safety gear or a special uniform. All these types of expenses are deductible if you are paying for them out of your pocket and not getting reimbursed.
Cost of Commuting
Driving your own car as part of your volunteer work also can yield a charitable deduction. Under section 170, the IRS provides a standard rate of $0.14 per mile driven in 2022 and 2023. Alternatively, you can deduct the actual costs of fuel (i.e., gas or diesel) and tolls. Once again, it is deductible only if you are not reimbursed for the expenses.
Travel Expenses
Travel expenses related to volunteering also can be deductible. To qualify, the expenses must be directly related to the volunteer work; not have been reimbursed; and be reasonable. The definition of reasonable is of course open to interpretation and relative depending on the circumstances; however, taking a private plane or flying first class is unreasonable in the eyes of the IRS.
You also can deduct the cost of meals needed while volunteering at the full cost (100 percent). The 50 percent business limitations do not apply.
Fundraising Costs
Hosting a fundraising event can cost big bucks. For individuals generous enough to host such an event, it is completely legitimate to deduct your unreimbursed expenses for putting on the event.
Recordkeeping
Like any tax deduction for personal or business reasons, keeping good records is key. Keep track of mileage with a daily logbook, keep receipts, and note what, where, when, who, and why for each volunteer-related expense. This applies to any of the items above, from simple mileage to hosting an entire fundraising event.
Conclusion
Volunteering is a great way to give back to your community or a cause you care about. It also can be a source of additional tax deductions, which will put more money in your pocket to spend or use for charitable purposes as you see fit. If volunteering is part of you and your family’s life, consider the guidelines outlined above and talk to your tax professional about your individual situation.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
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