DEDUCTING SANDY-RELATED VOLUNTEER EXPENSES

Many individuals, instead of or in addition to making cash donations to relief organizations, are offering hands-on assistance to victims of Sandy.

If you are able to itemize on Schedule A you may be able to claim a tax deduction for any “out of pocket” expenses connected with your Sandy-related volunteer efforts.

It is important to note that, to be deductible, you must be a volunteer with an IRS-qualified organization, such as the Red Cross.

Here is the word on deducting your expenses from the “Out-of-Pocket Expenses in Giving Services” section of IRS Publication 17 (Your Federal Income Tax), with some comments from me (any highlights are mine) -

“Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:

• Unreimbursed,

• Directly connected with the services,

• Expenses you had only because of the services you gave, and

• Not personal, living, or family expenses

If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. {Using the standard mileage allowance is probably the better choice.  FYI, this rate is set by Congress and not the IRS and has not changed in a dog’s age.  It is possible that Congress may pass legislation to increase this rate for Sandy-related travel only, as they have done in the past with high-profile natural disasters – rdf}

You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate.

You must keep reliable written records of your car expenses.  {This is very important.  Keep a mileage log in, for example, your pocket date book of all the miles driven for Sandy-related relief efforts.  Actuually you should keep good records of ALL of your relief-related expenses. - rdf}

Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure {However, on this issue the IRS also says – “The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip.” – rdf}, recreation, or vacation in the travel. This applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses.

Deductible travel expenses.   These include:

• Air, rail, and bus transportation,

• Out-of-pocket expenses for your car {see above – rdf},

• Taxi fares or other costs of transportation between the airport or station and your hotel,

• Lodging costs, and

• The cost of meals. {Unlike business meals you can deduct 100% of the cost of meals – you are not limited to 50%. - rdf}”

As I mentioned above, Congress may pass legislation to add or liberalize deductions for Sandy-related travel, as they have done in the past with high-profile natural disasters.  If they do I will let you know here at TWTP.

If you donate canned or other food items to a charity for Sandy victims be sure to keep your supermarket receipt and circle the items donated.  And if you donate used clothes or household items be sure to make a detailed listing of what you are giving.

Remember, you must give these items to a recognized charitable organization.  If you put together a care package and give or send it directly to a specific needy individual or family you cannot claim a deduction on Schedule A.

TTFN