Cash in on uncommon charitable tax breaks

Taxes » Tax Deductions »

If you think your tax deduction for charitable contributions ends when you write a check to your church or drop off that box of clothing at the Salvation Army, think again. You may be cheating yourself.

The IRS 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.

Tax form focused on 'Gifts to Charity' © Sean Locke Photography/

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.

If your volunteer work requires you to 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 might be able to deduct some expenses associated with that boarder, either a foreign or American student.

You meet the test if the student:

  • Is not your dependent or relative.
  • Is a full-time student in the 12th grade or lower at a U.S. school.
  • 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 per 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 could face paying taxes at the 15 percent long-term capital gains rate on your profit (20 percent for certain high earners with adjusted gross incomes in 2014 of $406,751 or more for single taxpayers, and $457,601 or more for married joint filers). 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 tax bill.


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