Out of Pocket Charity Deduction

With Gov. Romney’s charitable deductions in the news, it might not hurt to look at the deductions many taxpayers miss, those they pay out of pocket volunteering for a charity.

 Few people miss the ability to deduct the money, in the form of cash or check they give to a qualified charity. The organization must have 501(c) (3) and the taxpayer must have proof of the deduction in a receipt, check or credit card statement. If the contribution is over $250, the taxpayer must have a contemporary receipt from the organization. Most taxpayers also know they can get a deduction for goods they give to an eligible organization. This could be clothes and household goods or it could be a car, art or stocks. If the value of the contribution is over $500, the IRS requires form 8283 to be completed. There are also special requirements for certain contributions that the taxpayer must meet to take the deduction. Just check the Form 8283 instructions or your tax pro for all the details. And don't forget the documentation here also.

However, most taxpayers don’t realize that they can take out of pocket expenses they incur when volunteering. You can’t take the value of your time for volunteer work but you can use what you actually pay while participating. Expenses could be the actual cost of gas or mileage expense for driving your car; supplies you purchase, the cost of attending a convention or the cost of maintain a required uniform.

Some examples: you drive your own car to deliver meals on wheels for your church. If you track the miles you drive, you can use that expense as a charitable contribution. For 2011, the mileage rate was $0.14 a mile. If you teach a class for a charity and buy materials and supplies for the class (and are not reimbursed), you have a charitable contribution. If you attend a convention as a representative for the organization, you could take travel, meals and lodging expenses. You do have to be a little careful with this deduction. You have to be a representative for the organization and there can be no significant personal benefit like a vacation or recreation. A mission trip for your church might qualify for this deduction. Costs of maintaining a required uniform (like a hospital Pink Lady) is also a potential deduction.

The organization must be a qualified organization (501(c)(3)) and only expenses not reimbursed will count as a deduction. Out of pocket deductions are reported on the Schedule A as a cash contribution (line 16 in 2011) and you need to keep receipts and mileage logs like any other deduction. If you have questions about your particular situation, talk to your tax pro.

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