The IRS does not allow charitable deductions for donating services to a charity. However, the IRS does allow charitable deductions for out of pocket expenses incurred while donating services to charity. The expenses must be nonpersonal, directly connected with, and solely attributable to performing the donated services.
Examples of deductible unreimbursed expenses include:
- Uniforms unsuitable for everyday use
- Copying charges
- Office supplies
- Phone charges
- Travel expenses
Travel expenses and lodging (including meals subject to the 50% disallowance rule) are deductible only if:
- There is no significant personal pleasure, recreation, or vacation in the travel AND
- The performance of services is substantial
Example: Tommy volunteers on a church project where he fixes up houses for the indigent. Tommy buys small tools, cleaning supplies, and drives from house to house. Tommy can claim charitable deductions for his out of pocket expenses for the small tools, cleaning supplies, and transportation expenses.
Example 2: Johnny goes on a trip with his church group to Italy. They attend mass in several churches and spend a significant amount of time sight-seeing. In this case, it seems that Johnny derives significant personal pleasure from the trip so the travel expenses and lodging would not be deductible.
The use of a vehicle for charity is deductible at a rate of 14 cents per mile. Alternatively, taxpayers can deduct the actual gas and oil usage directly related to the charitable transportation. Parking fees and tolls are also deductible whether the standard mileage rate or the actual expenses method is used.
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Buzzkill Disclaimer: This post contains general tax information that may or may not apply in your specific tax situation. Please consult a tax professional before relying on any information contained in this post.