Many of you volunteer
to help raise funds or perform other tasks on behalf of animal-rescue groups and other charitable organizations. When the annual reckoning with the Internal Revenue Service rolls around, the reward for your willingness to help out can take the form of write-offs for unreimbursed expenses incurred while you do volunteer work for rescue groups. To qualify as charitable deductions, the expenses in question must further the groups’ missions, such as foster care for stray animals.
As an animal-rescue volunteer, you need to be mindful of tricky rules for donations, whether they take the form of gifts of cash or property or volunteer expenses. What follows is a summary of the many possibilities.
Only Out-of-Pocket Outlays Count
The law allows volunteers to claim itemized deductions on Schedule A of Form 1040 only for what you spend to cover unreimbursed expenses—for instance, telephone calls, postage stamps and stationery, as well as other materials (say, to prepare
posters or other forms of advertising for fund-raising campaigns).
What kinds of expenses can rescue workers write off at tax time? Some examples of qualifying outlays that are frequently overlooked: animal feed, medicines, cat litter, litter boxes, pet dishes, cleaning supplies, garbage bags, paper towels, laundry detergent and dish detergent; animal bedding, animal toys, fees paid to veterinarians and trainers, and food for volunteers building temporary shelters for pets evacuated from flood zones in hurricanes.
Forget About Deducting Your Time
While deductions are allowed for gifts of property, the IRS doesn’t consider your services to qualify as “property.” Nor does the law allow you to claim anything for the use of your home or office to conduct meetings: that, too, isn’t a contribution of “property.”
Uniforms
Some organizations require volunteers to wear uniforms. Because these uniforms aren’t adaptable to ordinary wear, deductions are allowed for their cost and cleaning.
Travel
An often missed outlay begins the moment that you leave your home. Your allowable deductions include travel expenses to and from animal shelters, veterinarians, committee meetings, fundraising events, and so on. If you travel to and from your volunteer work by planes, trains, buses, or taxis, just make sure to keep track of your fares and claim them as travel expenses.
If you use your own auto, you have two options for handling the expenses: The first option is to deduct the actual cost of gas and oil. Unlike write-offs for business driving, you can’t claim depreciation because that isn’t an actual cash payment. Nor can you claim insurance and repairs unless you use the car only for charitable driving or the repairs are directly attributable to that use.
The second option is to make the paperwork simpler by claiming a standard mileage rate. The standard rate is 14 cents a mile for tax year 2011, unchanged since 1997, as set by law.
Whether you use the mileage allowance or drive a gas guzzler and claim actual costs, remember to deduct parking fees and bridge or highway tolls, as well. It’s a good idea, in case an IRS examiner questions your charitable travel, to be able to support your deductions with a glove compartment diary in which you record why and how far you went, as well as what you spend on parking. You don’t have to use the same car each time and can use more than one car at the same time. If you rent an auto and drive it only for charitable travel, include the entire rental charge with your other charitable expenses.
Overnight Expenses
When volunteer work requires that you be away from home overnight, your deductions also include lodgings and meals as long as they’re “reasonable,” as opposed to “lavish or extravagant.” Note that these meals are 100 percent deductible, unlike business meals, which are only 50 percent deductible.
An example: You can deduct these expenses when you attend an organization’s convention as a duly appointed delegate. But you can’t deduct for such personal expenses as sightseeing or movie tickets. Nor are you allowed to deduct travel or other expenses incurred by your spouse or children.
To back up your deductions in the event of an IRS audit, save a copy of the convention program and check off the sessions that you attend as a delegate. Sign an attendance book for any sessions that provide one. Keep a diary of your convention related expenses, along with hotel and restaurant bills.
IRS Paperwork
Strict rules apply when a volunteer incurs an unreimbursed expense of $250 or more, such as an airline ticket. No deduction for the outlay is permitted unless you obtain and keep for your records a written statement from the charity. The statement needs to describe the type of services you performed for the charity and whether you received any benefits in return. The charity needn’t list the expenses you pay as a volunteer.
Audits
Rescue workers might avoid the bother of audits by including brief explanations with their returns. Their statements should explain how deduction amounts were arrived at.
They shouldn’t over-explain, cautions the IRS. It wants them to be concise and attach some supporting evidence, but not every receipt. They should attach copies, not originals, because the documents may become separated from their returns. Hold off on submitting originals until the agency actually asks for proof of deductions. The IRS doesn’t allow electronic filing of Form 1040s with attachments. Submit paper 1040s.
Help from the IRS
For more information, take a look at IRS Publication 526, Charitable Contributions, or telephone 800-TAX-FORM.
About the Author
Julian Block is an attorney and author based in Larchmont, NY. He has been cited as “a leading tax professional” (New York Times), “an accomplished writer on taxes” (Wall Street Journal) and “an authority on tax planning” (Financial Planning Magazine). His books include “Julian Block’s Tax Deductible Travel and Moving Expenses: How to Take advantage of Every Tax Break the Law Allows,” from which this article is excerpted. Please visit his site by clicking here.
What kinds of expenses can rescue workers write off at tax time? Some examples of qualifying outlays that are frequently overlooked: animal feed, medicines, cat litter, litter boxes, pet dishes, cleaning supplies, garbage bags, paper towels, laundry detergent and dish detergent; animal bedding, animal toys, fees paid to veterinarians and trainers, and food for volunteers building temporary shelters for pets evacuated from flood zones in hurricanes.
Forget About Deducting Your Time
While deductions are allowed for gifts of property, the IRS doesn’t consider your services to qualify as “property.” Nor does the law allow you to claim anything for the use of your home or office to conduct meetings: that, too, isn’t a contribution of “property.”
Uniforms
Some organizations require volunteers to wear uniforms. Because these uniforms aren’t adaptable to ordinary wear, deductions are allowed for their cost and cleaning.
Travel
An often missed outlay begins the moment that you leave your home. Your allowable deductions include travel expenses to and from animal shelters, veterinarians, committee meetings, fundraising events, and so on. If you travel to and from your volunteer work by planes, trains, buses, or taxis, just make sure to keep track of your fares and claim them as travel expenses.
If you use your own auto, you have two options for handling the expenses: The first option is to deduct the actual cost of gas and oil. Unlike write-offs for business driving, you can’t claim depreciation because that isn’t an actual cash payment. Nor can you claim insurance and repairs unless you use the car only for charitable driving or the repairs are directly attributable to that use.
The second option is to make the paperwork simpler by claiming a standard mileage rate. The standard rate is 14 cents a mile for tax year 2011, unchanged since 1997, as set by law.
Whether you use the mileage allowance or drive a gas guzzler and claim actual costs, remember to deduct parking fees and bridge or highway tolls, as well. It’s a good idea, in case an IRS examiner questions your charitable travel, to be able to support your deductions with a glove compartment diary in which you record why and how far you went, as well as what you spend on parking. You don’t have to use the same car each time and can use more than one car at the same time. If you rent an auto and drive it only for charitable travel, include the entire rental charge with your other charitable expenses.
Overnight Expenses
When volunteer work requires that you be away from home overnight, your deductions also include lodgings and meals as long as they’re “reasonable,” as opposed to “lavish or extravagant.” Note that these meals are 100 percent deductible, unlike business meals, which are only 50 percent deductible.
An example: You can deduct these expenses when you attend an organization’s convention as a duly appointed delegate. But you can’t deduct for such personal expenses as sightseeing or movie tickets. Nor are you allowed to deduct travel or other expenses incurred by your spouse or children.
To back up your deductions in the event of an IRS audit, save a copy of the convention program and check off the sessions that you attend as a delegate. Sign an attendance book for any sessions that provide one. Keep a diary of your convention related expenses, along with hotel and restaurant bills.
IRS Paperwork
Strict rules apply when a volunteer incurs an unreimbursed expense of $250 or more, such as an airline ticket. No deduction for the outlay is permitted unless you obtain and keep for your records a written statement from the charity. The statement needs to describe the type of services you performed for the charity and whether you received any benefits in return. The charity needn’t list the expenses you pay as a volunteer.
Audits
Rescue workers might avoid the bother of audits by including brief explanations with their returns. Their statements should explain how deduction amounts were arrived at.
They shouldn’t over-explain, cautions the IRS. It wants them to be concise and attach some supporting evidence, but not every receipt. They should attach copies, not originals, because the documents may become separated from their returns. Hold off on submitting originals until the agency actually asks for proof of deductions. The IRS doesn’t allow electronic filing of Form 1040s with attachments. Submit paper 1040s.
Help from the IRS
For more information, take a look at IRS Publication 526, Charitable Contributions, or telephone 800-TAX-FORM.
About the Author
Julian Block is an attorney and author based in Larchmont, NY. He has been cited as “a leading tax professional” (New York Times), “an accomplished writer on taxes” (Wall Street Journal) and “an authority on tax planning” (Financial Planning Magazine). His books include “Julian Block’s Tax Deductible Travel and Moving Expenses: How to Take advantage of Every Tax Break the Law Allows,” from which this article is excerpted. Please visit his site by clicking here.
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