Here we will discuss charity volunteer deductions under the Federal income tax rules. There are multiple rule and regulations applicable to various types of business and other deductions as per State income tax laws. However an experienced taxpayer can further guide about this process.
First questions for you to answer
1. Do you itemize deductions on your Federal income tax return? If yes, then this article is for you however if no then simply the answer is that you will not get a charitable deduction.
2. Are you volunteering for a Qualified Organization? There are multiple nonprofit organizations but unfortunately valuable or not qualified organizations.
In order to become a qualified organization their must be a charge on a government unit or it has to apply to the IRS.
The basic test, use of your car, record keeping
1. The basic test: You can simply take back certain amount you pay in giving services to a qualified organization and this amount must be:
- Not associated with your personal, living or family expenses.
- Reimbursement will not be considered.
- It might be directly associated with the services you provide and
- It will be incurred only because of the services you provide.
2. In case you are using your personal car to provide your services, you will ultimately be an eligible candidate to pass the basic test and you can deduct:
- 14 cents per mile as travelling charges to and from the qualified organization or it might be the actual variable cost in connection to that mileage.
- Moreover for tolls and parking, the amount can be deducted.
3. One very important thing is to keep the records of all these deductions because it might be possible that you have to submit it for fulfilling your eligibility criteria for your deduction.
Don’t travel to the charity by car?
If you are traveling to and from the charity’s location through train, taxi, bus, subway or using any other public transportation, you can still deduct those costs as per the policy. In that situation this traveling must be completely connected with the work of charity’s location and you are not using it for your personal, living or family purposes otherwise you cannot claim for the deductions.
Yes 14 cents per mile is silly
Obviously there are different regulatory news from IRS and other platforms about deducting cost of using a car. The International Revenue Code demands the IRS to manage all business and medical mileage rates based on operating circumstances of an automobile like car, trucks, vans.
From the start of January 1, 2013 the deduction rate was 56.5 cents per mile for business purpose and for medical or transportation it was 24 cents per mile. The IRS is responsible for launching new standard mileage rates for businesses according to operating system of vehicle and it can both be fixed and variable.
While for medical and moving purposes, this varies according to variable rates. Although in The International Revenue Code, 14 cents per mile is mentioned as standard mileage rate but they specifically did not mention any adjustments according to any inflation.
You can use actual costs rather than 14 cents per mile
The 14 cents per mile charitable rate is optional. Every volunteer has the right to deduct actual variable cost of operating an automobile especially for volunteer activities. These deductions can be done for gasoline, oil and all other taxes however repairing, maintenance charges, registration fees, cost of tires, insurance, depreciation are not included in it.
The actual variable costs are much higher than 14 cents per mile. For example gasoline cost per gallon is $3.50 and if the volunteer’s car consumes 20 miles per gallon then the cost price of gasoline is 17.5 cents per mile.
Contrary to it the medical and transportation rates are 23 cents per mile (also based on variable costs and there is no limitation set by statute).
Fixed cost especially for lease payments, insurance, license, registration fees and depreciation are not charged for medical, charitable or moving mileage calculations.
Frequently Asked Questions
FAQ#1- I donate time or services how much can I deduct?
As a volunteer when you donate either your time or services to any charity organization you cannot deduct its value and it is quite surprising for many volunteers too. As all volunteers are doing unpaid tasks, activities or services, they are not eligible for receiving taxable incomes. So when they will not get any taxable income, no tax deductions will be done.
FAQ#2- How do I find out if the group is a qualified organization?
The first step you have to do for finding a nonprofitable qualified organization is to check its status at CharityCheck101.org. This platform has all the data of each and every single nonprofit and charity organization credited by the IRS. One very important thing is to know that there are multiple groups not eligible to receive any charitable donations or contributions even though they are nonprofits. Even they are nonprofits. So first from CharityCheck101.org group’s report, in first line of its Tax Status tab, searches the name of an organization at CharityCheck101.org.
If you know the group’s nine digit EIN, simply put it into the search bar to get all the relevant details of that organization but keep one thing in mind that government institutes and churches are not bound to be recognized by the IRS as qualified organizations.
FAQ#3- Can I deduct donations made before the date the group is recognized by the IRS?
If you are working with an organization other than churches are government units then kindly track their information time by time so that you will get the actual information about if and when this organization will receive its IRS determination.
- You are not eligible to deduct unless IRS pass the organization and provide its 501(c)(3)text exemption ruling.
- So when the ruling is received, the complete data of charitable organization will be rechecked from the date it applied for exemptions to the date it was first established/created. However this filling must be done within first 27 months of establishment.
Here we discuss a case study, for example in January 1, 2012 an organization was established and they filed their exemption on May 1, 2012. So the time when that organization will receive positive remarks from IRS evaluation process, you can claim for deductions from January 1, 2012. However if IRS didn’t release any positive determination about the organization until after April 15, 2013, you will have no right to deduct on or before April 15. However different kind of extensions and amendments are possible but they are quite expensive compared to the actual value of the deduction.