While I know you probably don’t volunteer to get a tax deduction, paying fewer taxes might free up some time to volunteer even more. If you itemize your tax deductions and volunteer, you may be entitled to some valuable deductions.
Before taking a tax deduction for your expenses incurred while volunteering, here are a few things to consider.
What Volunteering Expenses Can You Deduct?
I think it is great that the IRS may give you a little tax break for doing good in your community. If getting a tax break rubs you the wrong way, consider donating your tax savings to your charity of choice. I don’t know about you, but I’d rather write a check to further the work of my favorite nonprofit versus sending a larger check to the IRS.
The expenses you incur while volunteering may add up to a nice tax deduction each year. To qualify for this tax deduction, the expenses you are planning to deduct must directly relate to the charity where you volunteer. Additionally, you must not have been reimbursed for those volunteering expenses. Furthermore, you must also itemize when filing your taxes.
Here are a few more specifics of what you can and cannot deduct.
Is time spent volunteering tax deductible?
Sadly, no. You cannot deduct the “value” of your time, regardless of how valuable it may be. Wouldn’t it be amazing if Adele could say, “I bill $X per hour,” and then be able to deduct that amount from her taxes for any hours she spent performing at charity events? However, she likely could deduct some of the cost incurred to make those charitable performances happen.
What kind of volunteering expenses are deductible?
The list of incidental expenses that may be tax deductible is endless. Volunteers may deduct expenses for things like phone calls, postage, paper and printer ink or other out-of-pocket costs.
These may also be tax deductible if your charity work requires gear or a uniform. If you volunteer at a hospital, you may be able to deduct the cost of scrubs and even having them cleaned.
Related: Will Your State Take A Cut Of Your Retirement Income?
Can we deduct commuting to volunteer?
If you use your car as part of your volunteer work, you may be eligible for a tax deduction. According to IRS.gov, the standard rate is 14 cents per mile when driven in service of a charitable organization in 2022. An alternative to this would be to deduct the actual cost of unreimbursed gas but not the maintenance of your car.
Can I deduct travel away from home for volunteer work?
Reasonable travel expenses will be tax deductible if tied to your volunteer work. Arriving via a private plane will likely raise a red flag unless there is some specific reason for it. Meals for volunteer service are 100% deductible and not subject to the same 50% limitations as meals for business.
Related: Family Business Tax Strategy
Recordkeeping for Volunteer Tax Deductions
Like any tax deduction, you will need to be able to substantiate your volunteer expenses. Please try to keep good records. Think who, what, where, when, and why when it comes to expenses tied to volunteering.
If you are generous enough to host a fundraiser, you can deduct your unreimbursed expenses for putting on the event. Make sure you keep specific records. If you are at the market buying alcohol in bulk, put all event-specific items on a separate receipt. This will help make tracking expenses easier.
Thank you to everyone reading this post who has volunteered and helped make the world a better place. If you have more questions about how to save money on your taxes and reach your financial goals, find an amazing tax planning financial planner to help guide your.