It may seem crazy to be sharing tax tips with you in the middle of summer, but to me it makes perfect sense. Why? Because the tax tips I am writing about today involve charity work. And I know that a lot of people use the summer months to focus on giving back in one way or another. I also know that many people volunteer all year long, but for the sake of th...is posts timing, I’m thinking about those who use summer vacation time to give back.
That said, it is always smart to be thinking about your taxes throughout the year–keeping receipts filed in an organized way, noting miles you may have accrued, and thinking of ways you can legitimately reduce your tax liability come April 15. That’s why when a tip sheet from the Internal Revenue Service showed up in my inbox this morning, I wanted to share it with you–because it involves tax tips for charity work.
There are five points to keep in mind if you plan on deducting your charity work on your taxes next year–or any year:
1. You must volunteer to work for a qualified organization. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Select Check tool to see if the group is qualified.
2. You may be able to deduct unreimbursed travel expenses you pay while serving as a volunteer. You can’t deduct the value of your time or services.
3. The deduction qualifies only if there is no significant element of personal pleasure, recreation or vacation in the travel. However, the deduction will qualify even if you enjoy the trip.
4. You can deduct your travel expenses if your work is real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
5. Deductible travel expenses may include:
- Air, rail and bus transportation
- Car expenses Lodging costs
- The cost of meals
- Taxi fares or other transportation costs between the airport or station and your hotel
Perhaps the fact that giving back provides tax benefits will inspire you to get involved with a good cause this year.