Wednesday, December 20, 2000
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Wednesday, December 20, 2000 |
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Deducting the cost of doing good Perhaps the holiday season finds you volunteering at a homeless shelter or organizing a gift collection, or maybe even dressing as Santa at a party for disadvantaged children. If so, your costs for transportation to and from the shelter, for publicizing the gift drive, and for renting the Santa Claus suit may all qualify as deductible charitable contributions. According to the Georgia Society of CPAs, if you do volunteer work, you can generally claim a deduction for unreimbursed out-of-pocket expenses you incur when it directly benefits a charity. There are many expenses you can deduct and a few that you cannot. The following information can help you determine if your good deeds qualify for a tax break. AUTOMOBILE EXPENSES You CAN deduct the cost of driving your car in connection with your volunteer work. There are two ways to take the deduction. You may deduct the actual cost of gas and oil for traveling to and from meetings, fundraising events, and other charity-related work. Or, if you prefer, you can deduct a flat 14 cents per mile for every mile you travel that is directly related to charitable activities. Under either method, you can deduct parking fees and tolls. You CANNOT deduct your car's general repair and maintenance costs, depreciation, registration fees, or any part of the costs for tires and insurance. You CANNOT deduct car-related costs unless the organization directly benefits from your efforts. If, for instance, you drive several neighborhood children to Girl Scout meetings every week, the cost of driving is not deductible because the children receive the primary benefit and not the organization. MEAL AND TRAVEL EXPENSES You CAN deduct the cost of airfare or other transportation when your volunteer work takes you out of town overnight. You may also deduct the costs of meals and lodging while you are away on official charity business. Deductible travel expenses include air, rail, and bus transportation, taxi fares, and reasonable lodging costs and meal expenses. Because these travel expenses are not business related, they are not subject to the same limits as business deductions. You CANNOT deduct your expenses if the trip involves only nominal duties or, if for significant parts of the trip, you do not have any duties or responsibilities. The IRS says it is okay to have a good time, but if there is a significant element of personal pleasure, recreation, or vacation associated with the travel, a charitable deduction is disallowed. INCIDENTAL EXPENSES You CAN deduct the cost of buying, laundering, and dry cleaning a uniform you are required to wear while volunteering as long as the uniform is not suitable to every day wear. You CAN deduct the cost of stamps and stationery, materials and supplies you purchase to publicize an event, and the ingredients for a cake you bake for your church fundraiser, as well as the cost of long distance telephone calls in connection with your charitable endeavors. You CANNOT deduct the value of your time or your services, childcare costs incurred to enable you to volunteer, or the value of using your home or office to host meetings. REPORTING REQUIREMENTS Unreimbursed out-of-pocket expenses are considered cash contributions and are reported as an itemized deduction on Schedule A. The total of all charitable contributions made during the year is generally limited to 50 percent of one's adjusted gross income. (In rare cases, 20 percent and 30 percent limits apply.) It is important to keep records, such as canceled checks, to substantiate the amount of your out-of-pocket expenses. To deduct an unreimbursed expense of $250 or more, such as for a plane ticket or a dinner you hosted on behalf of the charity, you must follow IRS regulations. For example, for each such expense, you need to obtain a statement from the organization that describes the services you provided and shows whether you were provided with any goods or services in return. The acknowledgment must be obtained by the date you file your return, or the extended due date if you get an extension. Don't miss the opportunity to get a tax break in return for your volunteer efforts. A CPA can provide you with additional advice for making the most of deductible volunteer expenses. The GSCPA is the premier professional organization for CPAs in the state of Georgia. With over 10,000 members throughout the state, the purpose of the GSCPA is to promote the study of accounancy and applicable laws, provide continuing professional education, maintain high ethical and work standards, and provide information about accounting issues to the membership and the public. For more information, access our web site at www.gscpa.org. |