There are valuable tax breaks for volunteer workers who perform chores for religious institutions and other charitable organizations. Individuals who itemize their deductions on Form 1040’s Schedule A can write off what they spend to cover unreimbursed out-of-pocket outlays.
No deduction, though, for the value of the unpaid time that you devote to charitable chores. So, if the prevailing rate for the kind of services you render is $100 per hour and you wind up spending 100 hours to render those services during the year in question, that doesn’t entitle you to take a write-off of $10,000 for them. While deductions are allowed for gifts of property, the IRS doesn’t consider your services to qualify as “property.”
Nor does the law allow you to claim anything for the use of your home or office to conduct meetings. That, too, isn’t a contribution of “property.”
Uniforms. Some organizations, such as the Red Cross and the Scouts, require their volunteers to wear uniforms. Because these uniforms aren’t adaptable to ordinary wear, deductions are allowed for their cost and cleaning.
Blood donations. An IRS ruling says no deduction for donating blood, except for any travel expenses to and from the blood bank. How does the IRS justify this restriction? Easy: Here, too, it says that the donors are performing “services” and not donating property. On the other hand, the IRS insists on its share of any payment received for providing blood.
Overnight outlays. When volunteer work requires that you be away from home overnight, your deductions aren’t limited to travel expenses. They also include lodgings and meals, as long as they’re “reasonable,” as opposed to “lavish or extravagant.” Note that these meals are 100 percent deductible, unlike business meals, which are only 50 percent deductible.
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An example: While you can deduct these expenses when you attend an organization’s convention as a duly appointed delegate, you can’t deduct such personal expenses as sightseeing or movie tickets. Nor are you allowed to deduct travel or other expenses incurred by your spouse or children.
What if you stay at a luxury hotel? Possibly, the IRS will challenge the cost as lavish and extravagant. Whether you’re able to prevail might depend on the scope and importance of your charitable work.
A case in point: Harry T. Cavalaris, who sojourned at “deluxe” hotels when he did volunteer work for his church. A 1996 decision by the US Tax Court rebuffed the IRS contention that the lodging expenses were lavish, stating: “While few would characterize his choices of accommodations as frugal, they were generally convenient.”
Harry testified that he used hotels that hosted the meetings he attended or similarly priced lodgings nearby when rooms were unavailable at host hotels, a practice that saved him additional travel costs. Moreover, he held prestigious positions in the charitable organizations; so that staying at plush places might have been the reasonable thing to do. However, there the Tax Court drew the line. It disallowed extravagant tips, car repair expenses, spa charges, and other expenditures not incurred for charitable reasons.
Back up deductions. In the event of an IRS audit, save a copy of the convention program and check off the sessions that you attend as a delegate. Sign an attendance book for any sessions that provide one. Keep a diary of your convention-related expenses, along with hotel and restaurant bills.
Additionalarticles. A reminder for accountants who would welcome advice on how to alert clients to tactics that trim taxes for this year and even give a head start for next year: Delve into the archive of my articles (more than 160 and counting).
Stay competitive with your fellow accountants who turn to the articles when, say, they correspond with clients or they want to show clients how to nimbly sidestep pitfalls while capitalizing on opportunities to diminish, delay, or deep-six payments of sizable amounts that would otherwise swell IRS coffers.
Also be mindful of the articles when you strive to build name recognition, a goal attainable only by choosing and implementing strategies that set you apart from ferocious competition. Use the articles to prepare talks to audiences, such as business owners, investors, and retirees.
About Julian Block
Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com.