Can Volunteers Deduct COVID-19 Related Expenses?

In the second of a three-part series dedicated to deductions volunteers can take, Julian Block addresses topics like travel and COVID-19 related expenses. Charity-minded clients may be surprised to learn the IRS is rather lenient when it comes to taking deductions, provided taxpayers can back up the reason they are taking them.

Nov 12th 2020
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In a previous column, I discussed deductions available to Valerie, a volunteer who incurs unreimbursed, out-of-pocket expenses when she helps raise funds or perform other tasks on behalf of charitable organizations like religious groups, schools, and hospitals.

In this column, I’ll discuss how Valerie avails herself of other, overlooked deduction opportunities.

Travel. Often-missed outlays become available to volunteers as soon as they leave their homes or offices. Allowable deductions include travel expenses to and from charitable work sites—headquarters, committee meetings, fundraising events, etc.

The no-brainer moral for volunteer Valerie and other tax-savvy helpers: Save any receipts, ticket stubs, and boarding passes; those records might prove to be indispensable for audits.

Two options when Valerie and her fellow volunteers use their cars to do volunteer work on behalf of charities. The first: Deduct the actual cost of gas used in her charitable pursuits.

Unlike write-offs for business driving, Valerie can’t claim depreciation because that isn’t an actual cash payment. Insurance and repairs are also verboten, unless she uses the car exclusively for charitable driving or the repairs are directly attributable to that use. Just to be clear, the IRS’s definition of “car includes a van, pickup, panel truck or motorcycle.

The deciding factor here: For the trips in issue, why did Valerie get behind the wheel?

Valerie’s second option: Make the paperwork simpler by claiming the IRS’s standard mileage allowance for charitable driving of 14 cents per mile.

The allowance isn’t revised annually, like those for business and medical driving. Congress permanently set it at this amount (Internal Revenue Code Section 170). The Gang of 535 refuses to budge.

(A reminder for those of my Dear Readers who are political junkies and parse election outcomes. Gang membership might go beyond 535, a number that isn’t set in stone.)

Another opportunity: Whether Valerie uses the allowance or drives a gas-guzzler and claims actual costs, the IRS reminds her to deduct parking fees and road tolls, as well.

An example: In the course of her charitable work, Valerie drives 1,000 miles and shells out $50 for parking charges. Her allowable deduction is $190 (1,000 miles X 14 cents = $140, plus $50 parking). Or, should she pay more for gas and oil than the mileage allowance, she can deduct actual costs, plus parking.

Either way, it’s prudent for Valerie to keep a diary or some other kind of contemporaneous document in which she enters the why, the when and the how much of the miles and expenses that support her claims. They’ll be vital in case she encounters a persnickety IRS examiner who is dismissive of records that taxpayers prepare after they receive audit notices.

Drive carefully. Traffic tickets are never deductible. It matters not that Valerie was in a hurry to teach her Sunday-school class.

Dual-purpose trips. Let’s say she volunteers as a Sunday-school teacher and attends church services. It all depends on what she is able to establish as the primary purpose for her trips.

While there’s no hard-and-fast IRS rule, the amount of time spent on different activities is what the agency is likely to focus on. If Valerie spent most of her time teaching, I’d expect an IRS examiner to cut her some slack.

COVID-19-inspired expenses. Valerie helps organizations that focus on problems like homelessness and hunger. Many of them have shifted somewhat from their usual activities so as to deal with the corona crisis. They now also undertake deliveries of food and other necessities to, among others, disadvantaged individuals who cloister in multi-family buildings, where isolation is often impossible, and who must refrain from gathering with relatives or friends.

Valerie uses her car to deliver necessities to high-risk dwellings and to drive people to medical appointments. An understandably cautious Valerie dips into her own funds to pay for protective clothing that she wears while driving and delivering.

Will the IRS allow her to deduct PPE costs? What works in her favor is that protective items aren’t adaptable for ordinary wear, in contrast to business suits. While I’m not a gambling man, I’d bet the family farm that the government’s most unpopular agency will permit PPE expenses, just like it allows auto mileage and parking, as noted above.

In a future column, I’ll delve into other deductions that are available to volunteers.

Additional articles. 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 350 and counting). 

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