Millions of people spent Jan. 20 volunteering. That day was Martin Luther King Jr. Day and instead of a day off, many have turned the annual federal holiday into a day of public service.
The activities also raise the question of whether volunteer activity is tax deductible.
Time is not deductible
You cannot deduct the hours you spent serving meals at your neighborhood soup kitchen.
When you give of your time, it’s a flat-out gift. You can’t extrapolate that you would have been paid $20 an hour if you were at work, so your four hours at the nonprofit was worth $80.
Don’t think you can get around this by doing pro bono work for a charity in your field. An attorney who does free legal work for a charity still is not allowed to deduct the normal billable hour charge that paying clients face.
However, you might be able to get some tax benefit from your volunteering.
Any out-of-pocket costs associated with your volunteer effort are deductible. This includes such things as phone calls, postage stamps, stationery, computer paper and, in our soup kitchen example, food items you bought for the charity’s use.
Similarly, if you volunteer for an organization that requires you wear a uniform, such as a hospital auxiliary group, the cost of buying and cleaning the apparel is deductible. There’s one big caveat here. The uniform must be one that’s not for everyday wear. A candy striper’s distinctive red-and-white smock fits this deductibility requirement. But if your charity asks that you wear a blue shirt and khaki slacks, that won’t pass tax deduction muster since you can wear that just about anywhere without anyone questioning your sartorial taste.
Count the miles
Then there’s your transportation.
Driving to and from the charity where you’re volunteering is deductible at 14 cents per mile.
If your volunteer time includes picking up groceries for the soup kitchen, those miles count, too. So does the distance traveled to deliver meals to home-bound people who can’t make it to the kitchen for a meal.
Where volunteer travel is more involved, that could count, too. For example, if you’re a Boy Scout troop leader and you take the youngsters on an overnight camping trip so they can earn a new badge, your transportation and out-of-pocket expenses are deductible.
As with all types of deductions, charitable and otherwise, documentation is vital.
Substantiate your expenses by keeping a log that shows the connection between the expense and your volunteer work. Also keep receipts or canceled checks to back up your deduction.
Your favorite charity and the Internal Revenue Service thank you for your efforts and your attention to tax detail.
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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”