VOLUNTEERS MUST PROVE EXPENSES TO CLAIM DEDUCTIONS Volunteers can claim a tax deduction for out-of-pocket costs—these costs are considered a charitable contribution—but the costs must be substantiated. In a recent case, Jan Elizabeth Van Dusen of Oakland, California, cared for a total of 70 to 80 feral cats under a foster-cat program. She paid for their food, veterinary bills (for tests, treatment, vaccines and surgery) and other pet supplies totaling $12,068. She had receipts, credit card bills and other documentary proof of her outlays. In 2004, she claimed those costs for a tax deduction. In another case, Tawana Bradley of Louisville, Kentucky, acting as a volunteer coach for a football cheerleading squad, paid for pizza, party favors and other supplies for a squad party totaling $162.27. She had receipts. In 2006, she claimed this cost for a tax deduction. IRS Position: Volunteer expenses are subject to the same substantiation rule as cash contributions—they must be proven by canceled checks or bank statements, which these two taxpayers did not have. Amounts of $250 or more also must be substantiated by a written acknowledgment from the charity. Tax Court Ruling: Volunteer expenses up to $249 can be substantiated by receipts, credit card slips and other documentary proof—they are acceptable substitutes for canceled checks. Although Van Dusen was able to declare only a small portion of her expenses, the ruling set a precedent for other cases, such as Bradley’s. Caution: If the amount to be deducted is $250 or more, you do need a written acknowledgment from the charity, just as if you had made a cash donation. Lesson: Learn the substantiation rules for charitable donations (go to IRS Publication 526, Charitable Contributions, at irs.gov) to claim the full extent of your out-of-pocket costs. For example, track vehicle mileage incurred on behalf of charitable activities so that you can deduct mileage at the rate of 14 cents per mile. Jan Elizabeth Van Dusen, 136 TC No. 25 (2011); Tawana Bradley, TC Summary Opinion 2011-120
Posted on: Sun, 08 Jun 2014 18:56:20 +0000
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