Tax Tip: Dish Out Tax Rewards to Charitable Volunteers

By Ken Berry
 
This is the fifth article in our series of tax return tips for 2011 returns. 
 
Do you have clients who work just as hard for a nonprofit organization as they do at their regular jobs? Although taxpayers can't deduct the value of their "blood, sweat, and tears," they can still write off certain expenses that aren't reimbursed as charitable contributions.
 
What sort of expenses are we talking about? The expansive list for volunteers includes the following:
 
  • If you use your car for charitable driving, you may deduct out-of-pocket costs attributable to those trips. Instead of keeping track of all your actual expenses, you can use a flat rate of fourteen cents per mile (plus related parking fees and tolls) in 2011. 
  • Other expenses incurred while traveling on behalf of a charity, such as the cost of airfare, taxicab fares, and meals, are deductible. But there can’t be a significant element of personal pleasure, recreation, or vacation in the travel. Note that the usual 50 percent limit on meals doesn't apply here. 
  • If you’re required to wear special clothing while performing a charitable function – for example, a Boy or Girl Scouts uniform – you can write off the cost. Also, expenses incurred to clean and maintain special clothing are deductible as miscellaneous expenses.
  • Although you can’t deduct basic telephone or cell phone charges, you may write off the cost of any long-distance calls made on behalf of the charity. In addition, you can deduct the cost of a second telephone line or fax installed in your home for charitable purposes.
  • When you attend a fundraising event sponsored by a charity, you can deduct the difference between the cost and the fair market value of the benefit received. It's important to obtain written documentation from the charity for amounts above $75.
  • You may deduct meals and lodging costs associated with attending a convention on behalf of charitable organization, but only if you're an official delegate to the convention. Any personal expenses incurred while you're at the convention, like a round of golf or a sightseeing tour, are nondeductible.

These out-of-pocket costs, while relatively small individually, may add up to a significant amount on a client's 2011 tax return. It's a well-deserved tax reward for their charitable endeavors. 



See the whole series of Ken Berry's tax tips for the 2012 filing season
  1. How to Secure an 'Extra' Dependency Exemption
  2. Choose the 'Biggest and Best' State Tax Deduction
  3. Lock in Mortgage Interest Deductions for Points
  4. Generate Energy Credits for Clients
  5. Dish Out Tax Rewards to Charitable Volunteers
  6. A Party at Home? That's (Deductible) Entertainment!
  7. Spell Out Tax Rules for Business Education
  8. Add on Medical Expenses for a Nondependent
  9. How Do You Spell Tax Relief? C-a-s-u-a-l-t-y Loss
  10. Expand the Reach of Dependent Care Credit

Related article:

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.