Posted by Abundant Wealth Planning LLC

Is Volunteering Tax Deductible?

Is Volunteering Tax Deductible?

Is Volunteer Work Tax Deductible?

You volunteered because you care about your community and want to find a meaningful way to help others. But did you know that doing volunteer work may not be bad for your wallet?

The IRS would like to thank you for your service if you are volunteering. Expenses incurred while volunteering can be added to a tax deduction. To qualify, the amount you intend to deduct must be directly related to the charity you are volunteering for. In previous years, you were only eligible if you itemized your deductions on the annual return. However, due to the pandemic, even if you don't itemize it, you can still claim certain tax deductions related to volunteer work.

Some people may think that getting a tax deduction diminishes the hard work they put into a cause they are passionate about, but that is not the case. With a little extra cash in your pocket, you can donate cash to your favorite non-profit organization.

In short, is volunteering tax deductible? Any volunteer who volunteered for a §501(c)(3) tax-exempt organization may be entitled to certain deductions for personal expenses incurred while volunteering and receive a deductible charitable contribution for those expenses.

Even though the amount you can deduct may not be very high, it is still a great tax benefit that every volunteer should be aware of. We've listed five basic guidelines on how to claim voluntary tax deductions.

You must volunteer for a qualified organization.

To claim a charitable tax deduction, your organization must have tax-exempt status. While most public charities, churches, and nonprofit organizations are IRS qualified, many are not, so check the organization's tax status.

You can't deduct the value of your time.

The IRS does not allow you to deduct volunteer time. You have freely chosen to devote your time to support the cause, and you cannot value this time or the services you provide and deduct it in your tax return.

You can deduct mileage and travel expenses.

When you use a personal vehicle to get to and from where you are volunteering, it is deductible, as are the miles driven, transportation, meal delivery, or any driving you do that is directly related to volunteer work you do for your organization. You can choose:

  • Track your miles and take the standard deduction based on the standard IRS rate of 0.14¢ per mile. 

  • Deduct the value (actual cost) directly attributed to the service. Example: You drove 10,000 miles this year, and 200 were for your voluntary service. You can claim 2% (240 ÷ 10,000) of the cost of gasoline per year (it is necessary to keep all receipts and records of kilometers driven).

  • Ordinary car expenses, such as insurance, maintenance, tires, or depreciation, are not allowed to be deducted as if you were using the vehicle for business purposes. You cannot deduct mileage costs if your organization is already reimbursing you.

  • Reasonable travel expenses are also deductible if they relate to your volunteer work. 

Deduction of incidental expenses

If your volunteer work requires special equipment or a uniform that you must purchase, these may also be tax-deductible along with cleaning costs, but only if the uniform or items cannot be worn like normal clothing. For example, black jeans and a dark shirt would not be appropriate, but scrubs or an apron with the organization's logo would be.

The list of deductible incidental expenses may include items such as photocopying, mail, paper, or other reimbursable expenses. You will need receipts for all items, and you can request a cash donation receipt from the organization you are volunteering with.

Any charitable deduction of $250 or more must be accompanied by official documentation from the charity to which you are donating goods or services.

You must itemize your tax deductions. 

To deduct expenses or charitable contributions, you must itemize the deductions using Schedule A (Form 1040).

2021 Exception to the rule

You can make a charitable deduction of $300 even if you don't itemize it. The IRS has expanded tax credits as a government incentive to encourage Americans to help those in need.

For the fiscal year 2021, this benefit has been further extended. Instead of a $300 return deduction, it is $300 per person. Therefore, if you file a joint return using the standard deduction, you can deduct up to $600 for charitable contributions.

That being said, there are always benefits to itemizing charitable contributions.

Before 2020, you can deduct charitable contributions up to 60% of your adjusted gross income. The CARES Act increased this limit, allowing you to deduct up to 100% of AGI, and this temporary change has been extended through 2021.

Even though the amount you can deduct may not be very high, it is still a great tax benefit that every volunteer should be aware of.



Abundant Wealth Planning LLC
Contact Member