What can a charity volunteer deduct?

Let’s get this popular question, and misunderstanding, out of the way first. You can not deduct the value of your time or services donated to a charity. Volunteers are often surprised about this. Of course, since the volunteer wasn’t paid for the services, they didn’t receive taxable income. No taxable income, no tax deduction – a simple, clean result.

We’re talking in this article about charitable deductions under the Federal income tax rules. Different rules apply to business and other deductions, and under State income tax laws. As always, for more information contact an experienced and capable tax advisor.

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First questions to answer

1. Do you itemize deductions on your Federal income tax return? If you do, keep moving forward. If you don’t, continue only for information; you won’t be getting a charitable deduction.
2. Are you volunteering for a Qualified Organization? Many “nonprofit” organizations, however valuable, are not Qualified Organizations. To be a Qualified Organization, the organization must
• Be a church or
• Be a government or
• Apply to the IRS. Concerning this category, if the charity is listed in the SGO database, it is a “Qualified Organization” — check by going to the SGO Find-a-Charity page. Qualified organizations include other charities listed in IRS Publication 78. Be careful: many organizations have similar names, and an organization could be listed by a former name or “aka” name.

Items you can deduct

• For the use of your car:
• 14 cents per mile to and from the Qualified Organization location, or actual variable costs related to that mileage (look below for more information).
• Plus tolls and parking.
• Other costs, if they are (i) unreimbursed, and (ii) directly connected with the services you gave, and (iii) incurred only because of the services you gave, and (iv) not personal, living or family expenses.
• Be sure to keep good records — you need to be able to show the basis for your deduction.

Don’t travel to the charity by car?

Take the bus, train, subway, taxi or other public transportation to get to and from the charity’s location? As described in more detail under “Other costs” above, you can deduct those costs so long as: they are directly connected and only incurred because of the services you give; and are not personal, living or family expenses (and of course aren’t reimbursed).

Charities are not all above average – find out more about your favorite charity

Help from the IRS

See IRS Publication 526 for more details and for examples.

Yes, 14 cents per mile is silly

Undoubtedly you’ve seen the regular updates from the IRS and other sources concerning deducting costs of use of a car.The Internal Revenue Code requires the IRS to adjust the business and medical mileage rates based on changes in costs of operating a vehicle.

Beginning January 1, 2012, for example, you can deduct 55.5 cents per mile for business miles driven and 23 cents per mile driven for medical or moving purposes. The IRS based the standard mileage rate for business on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study.

The 14 cents is written right in the Internal Revenue Code (without language suggesting it be adjusted for inflation). See IRC Section 170(i) — which is part of the charitable deduction section of the Code. It hasn’t been changed in years. To get it changed, Congress will have to amend it — time to talk with your Congressperson.

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You can use actual costs rather than 14 cents per mile

The 14 cents per mile charitable rate is optional. A volunteer can actually deduct all variable costs (includes gasoline and all taxes thereon, oil, tires, and routine maintenance and repairs) of operating the car for volunteer purposes.

• Actual variable costs are likely higher than 14 cents per mile. For example, if the volunteer’s car gets 20 miles per gallon and gasoline costs $3.50 per gallon, the cost of gasoline alone is 17.5 cents per mile.
• By comparison, the medical and moving rate (which is also based on variable costs, but is not limited to a rate set by statute) is now 23 cents per mile.
• Fixed costs (such as depreciation or lease payments, insurance, and license and registration fees) are not allowed for either charitable, medical or moving mileage calculations.

Mileage rate history

Start Date	IRS Standard Mileage Rate (cents per mile)
	Business	Medical and Moving	Charity Volunteer
January 1, 2012	55.5	23	14
July 1, 2011	55.5	23.5	14
January 1, 2011	51	19	14
January 1, 2010	50	16.5	14
January 1, 2009	55	24	14
July 1, 2008	58.5	27	14
January 1, 2008	50.5	19	14
January 1, 2007	48.5	20	14

For rates prior to 2007 (including special Hurricane Katrina rates in effect in 2005 and 2006) see this IRS document.

Charities are not all above average – find out more about your favorite charity