|
If you think your
tax deduction for charitable contributions ends when
you write a check to your church or drop that box of
clothing off at the Salvation Army, think again. You
may be cheating yourself.
The Internal Revenue Service allows
several different ways to take tax advantage of your
goodwill.
Driving home deductions
Volunteer work itself does
not produce a tax deduction. However, your travel expenses
getting to and from the volunteer location are deductible.
If you use your car to help out once you get there (for
example, delivering food to the needy for your church),
that counts, too.
You can take a standard deduction
of 14 cents per mile on your tax return. Or, if it's
more advantageous and you kept track, you can deduct
the actual cost of your gas for your philanthropic driving.
With either choice, you also can include any parking
fees or tolls paid.
On your 2006 tax return, your charitable
travel could be worth a bit more if it was for relief
efforts connected to Hurricane Katrina. Special legislation
allows you to deduct such philanthropic travel at 32 cents
per mile. This special charitable driving deduction did not carry into 2007.
Out-of-pocket expenses
If you pay for some of a qualified organization's
expenses and aren't reimbursed, these costs can count
as charitable deductions. This might be buying stamps
for a group's mailings or purchasing office supplies
for the organization's administrative operations.
And if your volunteer work requires
you wear a uniform -- say, as a Red Cross hospital aide
-- the cost of the clothing and of keeping it clean
are deductible.
Student lodging can mean a tax
break
Did a student live with you last year? If you meet all
three parts of a three-part test, you may be able to
deduct some expenses associated with that boarder, either
a foreign or American student. You meet the test if
the student:
1) Is not your dependent or relative,
2) Is a full-time student in the 12th or lower grade
at a U.S. school, and
3) Lives in your home under a formal agreement with
a qualified organization to provide educational opportunities
for the student.
You can deduct up to $50 a month
for each full calendar month the student lives with
you. The IRS even eases the definition of a month in
these cases. When a student meets the three conditions
above for 15 or more days, that counts as a full month.
Gifts of appreciated property
You also can give appreciated assets, enabling you to
avoid paying capital gains taxes while simultaneously
getting a tax deduction. This tax move is most beneficial
if you donate stock you've owned for more than a year
and its value has increased substantially.
If you sell the appreciated stock,
you'll have to pay taxes at the 15-percent
long-term capital gains rate on your profit. Even
if you give the cash you make from the sale to a charity,
you'll still have to pay the taxes. But if you give
the stock directly to the qualified organization, you
can claim a deduction for the full asset price at the
time you donated it and escape the capital gains bill.
|
