Your Money

Volunteer efforts can offer tax breaks
More and more individuals are volunteering these days for the good of others. People who volunteer their services generally do so as a gesture of goodwill, but there may be tax breaks available from the federal government for their generosity.

You enjoy volunteering and knowing that you’re making a difference in your community. It’s part of who you are. But did you know you can receive tax deductions on many costs associated with volunteering, such as mileage and other travel expenses, paper, copying, convention attendance fees, parking, uniforms (if purchased on your own), etc.? Although these deductions apply ONLY if you are not getting reimbursed by the organization you are assisting, and if you are itemizing on your tax form, they may ease your tax situation.

As you continue to support the Royal Neighbors mission of connecting with others in your community through your volunteer efforts, keep the following tax tips in mind:

Away-from-home travel – As a volunteer, you may frequently pay your own way when traveling away from home overnight in connection with charitable work. These out-of-pocket costs are deductible if they are properly documented, are a reasonable amount, and there is no significant element of personal pleasure, recreation, or vacation in the travel (meals are deductible only if an overnight stay is necessary).

Transportation by car – When you use your car in connection with volunteer charitable work (delivering meals, driving to destinations where services are performed, etc.) you may deduct either the actual, unreimbursed, out-of-pocket expenses directly tied to the charitable work, such as expenses for gas and oil OR $.14 per charitable-use mile ($.32 per mile for those working for Hurricane Katrina victims).

Entertaining for charity – You may find yourself entertaining individuals who could potentially make large donations to your favorite cause. You may deduct the cost of these activities on behalf of a charity, but the cost of your own entertainment is not deductible.

Services provided – There is no deduction for the value of the services you provide.

New revisions to the tax code require that you have a receipt from the charitable organization or a copy of a bank record such as a cancelled check before you are allowed to take a tax deduction for a cash contribution to a charity.

How to choose your cause
Whether your volunteer efforts include donating out-grown clothing to a homeless shelter, giving a cell phone you don’t use to a home for battered women, or sharing your time at a soup kitchen, remember to choose your charity wisely before contributing time, items, or funds.

• Plan your giving just as you would your expenses or investments. Take the time to identify which causes are important to you.
• Give to what you're passionate about. If you love animals, work with a humane society. If you want to help the environment, become involved with an organization like the Sierra Club. If you want to help women return to the workforce, check out a local organization that gets behind that effort.
• Research the organization before you send a check. Make sure you have the exact name of the organization and confirm its 501(c)(3) status. Go to www.charitynavigator.org or www.give.org to be sure it's worthy of your financial support.
• Learn how your money will be used. Check the organization's Web site and read about how your donation will help fulfill its mission.

You are advised to consult with your attorney or qualified tax professional for more information.

We will provide a simple form, Form 1280 (Report of Your Volunteer Activities), to help track your activities for your records as well as ours. Find it here or call us at (800) 627-4762.